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BUSINESS LAWS
CONTRACT
DEFINITION OF CONTRACT
It is an agreement made between two or more parties which the law will enforce Sec. 2(h) Indian Contract Act, 1872 defines a Contract as an agreement enforceable by law. Every agreement and promise enforceable at law is a Contract An agreement creating and defining obligations between the parties What is enforceability of an Agreement? An agreement is defined as “Every promise and every set of promises, forming consideration for each other” A promise is defined thus “When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise. An agreement is an accepted proposal To form an agreement, there must be a proposal or offer by one party and its acceptance by the other. An agreement which gives rise to social obligation is not a contract AGREEMENT = OFFER + ACCEPTANCE CONSENSUS AD IDEM The parties to the agreement must have agreed about the subject matter of the agreement in the same sense and at the same time. Unless there is consideration [ consensus ad idem] , there can be no contract. ESSENTIAL ELEMENTS OF VALID CONTRACT Offer and acceptance Intention to create legal relationship Lawful consideration Capacity of parties – competency Free and genuine consent Lawful object Agreement not declared void Certainty and possibility of performance Legal formalities Offer and acceptance There must be two parties to an agreement One party makes the offer and other party accepts it
The terms of the offer must be definite and the acceptance of the offer must be absolute and unconditional The acceptance must be according to the mode prescribed and must be communicated to the offeror. Intention to create legal relationship When two parties enter into an agreement, their intention must be to create legal relationship between them If there is no such intention on the part of the parties, there is no contract between them Agreements of social or domestic nature do not contemplate legal relationship as such they are not contracts Case :( Balfour V. Balfour)
- A husband promised to pay his wife a household allowance of $30 every month. Later the parties separated and the husband failed to pay the amount. The wife sued for the allowance. Held, agreements such as these were outside the realm of contract altogether Lawful consideration Consideration means an advantage or benefit moving from one party to the other. It is the essence of a bargain. “something in return”. A promise to do something and getting nothing in return is usually not enforceable by law Consideration need not necessarily be in cash or kind It may be an act or abstinence or promise to do or not to do something It may be past, present or future It must be real and lawful Capacity of parties – Competency The parties to the agreement must be capable of entering into a valid contract Every person is competent to contract if he Is of the age of majority Is of sound mind and Is not disqualified from contracting by any law to which he is subject Free and genuine consent It is essential to the creation of every contract that there must be free and genuine consent of the parties to the agreement The consent of the parties is said to be free when they are of the same mind on all the material terms of the contract There is absence of the free consent if the agreement is induced by Coercion, Undue Influence, Fraud, Misrepresentation etc.,
- An agreement not enforceable by law is said to be void
- A void agreement does not create any legal rights or obligations Void contract
- A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable
- A contract, when originally entered into, may be valid and binding on the parties, it may be subsequently become void
- Eg war or Govt. Order Illegal agreement
- An illegal agreement is one which transgress (controversy) some rule or basic public policy or which is criminal in nature or which is immoral. All Illegal agreements are void but all void agreements are not necessarily illegal Unenforceable contract
- An unenforceable contract is one which cannot be enforced in court of law because of some technical defect such as absence or writing etc., CLASSIFICATION ACCORIDNG TO FORMATION Express contract
- If the terms of contract expressly agreed upon at the time of formation of the contract, the contract is said to be an express contract Implied contract
- An implied contract is one which is inferred from the acts or conduct of the parties or course of dealings between them Quasi contract
- A quasi contract is not a contract at all. A contract is intentionally entered into by the parties. A quasi contract is created by law. It resembles a contract in that a legal obligation is imposed on a party who is required to perform it.
- Eg : T a tradesman, leaves goods at C’s house by mistake. C treats the goods as his own.
- C is bound to pay for the goods E commerce contract
- The contracts which is entered into between two parties via internet is called E
Commerce Contract CLASSIFICATION ACCORDING TO PERFORMANCE Executed contract
- Executed means that which is done. If both the parties have performed their obligations, they are executed contracts Executory contract
- Both the parties have yet to perform their obligations
- It may sometimes partly executed and partly executory Unilateral
- When only one party has to fulfill his obligation at the time of the formation of the contract, the other party having fulfilled his obligation at the time of the contract or before the contract comes into existence
- A permits a railway coolie to carry his luggage and place it in a carriage. The contract comes to an end as it places it in carriage. Now it is the obligation of A to pay the amount’ Bilateral contract
- The obligation on the part of both the parties the contract is outstanding at the time of formation of the contract. (Executory Contracts) REMEDIES FOR BREACH OF CONTRACT WHAT IS A REMEDY? A remedy is the means given by law for the enforcement of a right. WHEN A CONTRACT IS BROKEN, THE INJURED PARTY, HAS ONE OR MORE OF THE FOLLOWING REMEDIES: Rescission of the contract Suit for Damages Suit upon Quantum Meruit Suit for specific performance of the Contract Suit for injunction.
When a contract has been broken, the injured party can recover from the other party such damages as naturally and directly arose in the usual course of things from the breach.These damages are known as ordinary damages. E.g.: A contracts to sell and deliver 50 quintals of Farm wheat to B at Rs.475 per quintal, the price to be paid at the time of delivery. The price of Wheat rises to Rs. 500 per quintal and A refuses to sell the Wheat. B can claim damages at the rate of Rs.25 per quintal. In a contract for the sale of goods, the measure of damages on the breach of a contract is the difference between the contract price and the market price of such goods on the date of the breach.If, however, the thing contracted for is not available in the market, the price of the nearest and best available substitute may be taken into account for calculating damages. Where the subject matter of a contract is goods specially made to order and which are not marketable, the price of the goods is the measure of the damages. COMPENSATION IS NOT TO BE GIVEN FOR ANY REMOTE OR INDIRECT LOSS OR DAMAGE E.g: A contracts to pay a sum of money to B on a specified day. He does not pay the money on that day. B in consequence of not receiving money on that day, is unable to pay his debts, and is totally ruined. A is not able to make good to B anything except the principal sum he contracted to pay together with interest up to the day of payment. EFFECT OF NEGLECT BY PROMISEE If any promisee neglects or refuses to afford the promisor reasonable facilities for the performance of his promise, the promisor is excused by such neglect or refusal as to any non- performance caused thereby. E.g: A contracts with B to repair his house. B neglects or refuses to point out to A the places in which his house requires repair. A is excused for the non-performance of the contract, if it is caused by such neglect or refusal. DAMAGES IN CONTEMPPLATION OF THE PARTIES Damages other than those arising form the breach of the contract may be recovered if such damages may reasonably be supposed to have been in the contemplation of the both of the parties as the probable result of the breach of the contract. Such damages are known as Special Damages,witch cannot be claimed as the matter of right SIMPSON VS LONDON & N.W.RAIL.CO. S sent some specimens of his goods for exhibition at an agricultural show.After the show he entrusted some of his samples to an agent of the railway company for carriage to another show ground at New Castle. On the consignment note he wrote “Must, be at New Castle, Monday certain”. Owing, to a default on the part of the railway company, the samples arrived late for the show. Held, S could claim damages for the loss of profit at the show.
VINDICTIVE OR EXEMPLARY DAMAGES
Damages for the breach of a contract are given by way of compensation for loss suffered, and not by way punishment for wrong inflicted. Hence, “vindictive” or “exemplary” damages have no place in the law of contract because they are punitive by nature. But in case of (a) Breach of promise to marry and (b) Dishonor of a cheque by banker wrongfully when he possesses sufficient funds to the credit of the customer, the Court may award exemplary damages. NOMINAL DAMAGES Where the injured party has not in fact suffered any loss by reason of the breach of a contract, the damages recoverable by him are nominal. CASE : BRACE VS CALDER A firm consisting of four partners employed B for a period of two years. After six months two partners retired, the business being carried on by the other two. B declined to be employed under the continuing partners. Held, he was only entitled to nominal damages as he had suffered no loss. DAMAGES FOR LOSS OF REPUTATION These are generally not recoverable. An exception to this rule exists in the case of a banker who wrongfully refuses to honor a customer’s cheque. IF the customer happens to be a tradesman, he can recover damages in respect of any loss to his trade reputation by the breach. And the rule of law is : THE SMALLER THE AMOUNT OF THE CHEQUE DISHONOURED, THE LARGER THE AMOUNT OF DAMAGES AWARDED. BUT IF THE CUSTOMER IS NOT A TRADESMAN, HE CAN RECOVER ONLY NOMINAL DAMAGES. CASE : ADDIS VS GRAMOPHONE CO LTD A was wrongfully dismissed in a harsh and humiliating manner by G from his employment. Held, (a) A could recover a sum representing his wages for the period of notice and the commission which he would have earned during that period; but (b) He could not recover anything for his injured feelings or for the loss sustained from the fact that his dismissal made it more difficult for him to obtain employment. MITIGATION OF DAMAGES It is the duty of the injured party to take all reasonable steps to mitigate the loss caused by the breach. He cannot claim to be compensated by the party in default for loss which he ought reasonably to have avoided. That is he cannot claim compensation for loss which is really due not to the breach but due to his own neglect to mitigate the loss after the breach.
The term Indemnity literally means “Security against loss”. In a contract of indemnity one party
- i.e. the indemnifier promise to compensate the other party i.e. the indemnified against the loss suffered by the other. The English law definition of a contract of indemnity is – “it is a promise to save a person harmless from the consequences of an act”. Thus it includes within its ambit losses caused not merely by human agency but also those caused by accident or fire or other natural calamities. The definition of a contract of indemnity as laid down in Section 124 – “A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a contract of indemnity. The definition provided by the Indian Contract Act confines itself to the losses occasioned due to the act of the promisor or due to the act of any other person. Under a contract of indemnity, liability of the promisor arises from loss caused to the promisee by the conduct of the promisor himself or by the conduct of other person. [Punjab National Bank v Vikram Cotton Mills]. Every contract of insurance, other than life insurance, is a contract of indemnity. The definition is restricted to cases where loss has been caused by some human agency. [ GajananMoreshwar v Moreshwar Madan] Section 124 deals with one particular kind of indemnity which arises from a promise made by an indemnifier to save the indemnified from the loss caused to him by the conduct of the indemnifier himself or by the conduct of any other person, but does not deal with those classes of cases where the indemnity arises from loss caused by events or accidents which do not depend upon the conduct of indemnifier or any other person. [ Moreshwar v Moreshwar ] “Contract of indemnity” defined.-A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a contract of indemnity”. Illustration A contracts to indemnify B against the consequences of any proceedings which C may take against B in respect of a certain sum of 200 rupees. This is a contract of indemnity. Nature of Contract of Indemnity – A contract of indemnity may be express or implied depending upon the circumstances of the case, though Section 124 of the Indian Contract Act does not seem to cover the case of implied indemnity. A broker in possession of a government promissory note endorsed it to a bank with forged endorsement. The bank acting in good faith applied for and got a renewed promissory note from the Public Debt Office. Meanwhile the true owner sued the Secretary of State for conversion who in turn sued the bank on an implied indemnity. It was held that – it is general principle of law when an act is done by one person at the request of another which act is not in itself manifestly tortious to the knowledge of the person doing it, and such act turns to be injurious to the rights of a third
person, the person doing it is entitled to an indemnity from him who requested that it should be done. [Secretary of State v Bank of India]. The Indian Contract Act also deals with special cases of implied indemnity –
- U/s 69 if a person who is interested in payment of money which another is bound by law to pay and therefore pays it, he is entitled to be indemnified. For instance – if a tenant pays certain electricity bill to be paid by the owner, he is entitled to be indemnified by the owner.
- Section 145 provides for right of a surety to claim indemnity from the principal debtor for all sums which he has rightfully paid towards the guarantee.
- Section 222 provides for liability of the principal to indemnify the agent in respect of all amounts paid by him during the lawful exercise of his authority. The plaintiff, an auctioneer, acting on the instruction of the defendant sold certain cattle which subsequently turned out to belong to someone else other than the defendant. When the true owner sued the auctioneer for conversion, the auctioneer in turn sued the defendant for indemnity. The Court held that the plaintiff having acted on the request of the defendant was entitled to assume that, if it would have turned out to be wrongful, he would be indemnified by the defendant. [Adamson v Jarvis]. Right of Indemnity Holder and Indemnifier An indemnity holder (i.e. indemnified) acting within the scope of his authority is entitled to the following rights –
- Right to recover damages – he is entitled to recover all damages which he might have been compelled to pay in any suit in respect of any matter covered by the contract.
- Right to recover costs – He is entitled to recover all costs incidental to the institution and defending of the suit.
- Right to recover sums paid under compromise – he is entitled to recover all amounts which he had paid under the terms of the compromise of such suit. However, the compensation must not be against the directions of the indemnifier. It must be prudent and authorized by the indemnifier.
- Right to sue for specific performance – he is entitled to sue for specific performance if he has incurred absolute liability and the contract covers such liability. The promisee in a contract of indemnity, acting within the scope of his authority, is entitled to recover from the promisor- (1) all damages which he may be compelled to pay in any suit in respect of any matter to which the promise to indemnify applies (2) all costs which he may be compelled to pay in any such suit if, in bringing or defending it, he did not contravene the orders of the promisor, and acted as it would have been prudent for him to act in the absence of any contract of indemnity, or if the promisor authorized him to bring or defend the suit;
The delivery of goods by one person to another for some purpose, upon a contract, that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. Duties and Rights of Bailee& Bailor To disclose known faults: If he does not disclose he is responsible for any damages caused to the bailee directly from such faults
- Read vs. Dean
- A hires a motor launch from B for holiday on the river Thames. The launch caught fire and A was unable to extinguish it as the fire-fighting equipment was out of order. As such he was injured and suffered loss. Held, B was liable. 2.To bear extraordinary expenses of bailment:
- E.g.: A lends his horse to B, a friend, for two days. The feeding charges are to be paid by B. But if the horse meets with an accident, A will have to repay B medical expenses, incurred by B.
- Where in the case of gratuitous bailment, the goods are to be kept or to be carried, or some work is to be done upon the goods by the bailee for the bailor, the bailor must repay to the bailee all the necessary expenses incurred by him for the purpose of the bailment.
- E.g.: A leaves his car with B a friend, for safe custody for two months, B has to pay Rs.100 per month to the night watchman for keeping a watch over the car. It is the duty of A to pay B the necessary expenses incurred by B, 3. To indemnify bailee for loss in case of premature termination of gratuitous bailment:
- In case the loss accruing to the bailee from such premature termination should not exceed the benefit he has derived out of the bailment.
- In case the loss exceeds the benefit, the bailor shall have to indemnify the bailee.
- E.g.: A lends an old discarded bicycle to B gratuitously for three months. B incurs Rs.120 for repairs. IF A asks for the return of the bicycle after one month, he will have to compensate B for expenses incurred by B in excess of the benefit derived by him. 4. To receive back the goods:
- If the bailor refuses to receive back the goods, the bailee is entitled to receive compensation from the bailor for the necessary expenses of custody. 5.To indemnify the bailee: If the title of the bailor is defective and the bailee suffers in consequence….
1.Enforcement of rights
- Can enforce by suit all the liabilities or duties of the bailee as his rights.
- Avoidance of contract
- Bailor can terminate the bailment- if bailee does things inconsistent with the bailment
- Return of goods lent gratuitously
- If goods lent gratitutiously bailor –can ask for return anytime –but if loss suffered by bailee –over the benefit derived then bailor has to indemnify. 4.Compensation from a wrong-doer.
- Third person is a wrong fully deprives the bailee of the use or possession of the goods bailed or does injury the bailor or bailee can suit on the third person. 1.To take reasonable care of the goods bailed:
- If in spite of the bailee’s reasonable care of them,. IF, in spite of the bailee’s reasonable care, goods are damaged or destroyed in any way, the bailee is not liable for the loss, destruction or deterioration of the things bailed. Coldman Vs Hill
- Some cattle belonging to A were agisted (given for feeding grass against payment) with B. Without any negligence on B’s part the cattle were stolen. B did not inform the owner or the police or make any effort to recover them, because he thought it would be useless to do so. Held, B was liable for the loss.
- 2.Not to make any unauthorized use of goods: E.g.: A hires a horse in Calcutta from B expressly to march to Varanasi. A rides with due care, but marches to Cuttack instead. The horse accidentally falls and is injured. A is liable to compensate B for the injury to the horse. 3. Not to mix the goods bailed with his own goods: IF he mixes the bailor’s goods with his own goods
- (a) with the bailors consent: both the parties shall have a proportionate interest in the mixture thus produced
- (b) without the bailors consent: if the goods can be separated or divided, the bailee is bound to bear all the expenses incurred in the separation of the bales, and any other incidental charges.
- © without the bailor’s consent: If the mixture is beyond the separation, the bailor is entitled to be compensated by the bailee for the loss of the goods.
- (d) IF the goods of bailor were mixed up by some act unknowingly, the mixture belongs to bailor and the bailee in proportion to their shares but the cost of separation will have to be borne by the bailee. 4.Not to set up an adverse title 5. TO return any accretion(increase) to the goods
- E.g.: A leaves a cow in the custody of B to be taken care of. The cow has a calf. B is bound to deliver the calf as well as the cow to A.
valued at $6 per bullock and pay the difference in cash. Held, the contract was a contract of sale 4.Transfer of general property: there must be a transfer of general property as distinguished from special property in goods from the seller to the buyer. If A owns certain goods, he has general property in the goods. IF he pledges them with B, B has special property in the goods. 5.Essential elements of valid contract: All the essential elements of a valid contract must be present in the contract of sale. Rights of Unpaid Seller – The seller of goods is deemed to be an ‘ unpaid seller ’ within the meaning of this Act (a) When the whole of the price has not been paid or tendered. (b) When a bill of exchange or other negotiable instrument has been received as conditional payment, and the conditions on which it was received has not been fulfilled by reason of the dishonour of the instrument or otherwise. Rules as to delivery of goods- - It is the duty of the seller to deliver the goods and the buyer to pay for them and accept them, as per the terms of the contract and the law on sales. The delivery of goods and payment of the price are concurrent conditions as per the law on sales unless the parties agree otherwise. Conditions And Warranties- The Sale of Goods Act, identifies the terms, “ Conditions and Warranties ” as being of a prime significance in a contract of sale. A stipulation which is essential to the main purpose of a contract is known as a condition. A stipulation which is collateral to the main purpose of the contract is a warranty. Types The conditions and warranties may be express or implied. Express conditions and warranties are which, are expressly provided in the contract. Implied conditions and warranties are those which are implied by law or custom; these shall prevail in a contract of sale unless the parties agree to the contrary. Implied Conditions i) Condition as to title -- In every contract of sale, unless the circumstances of the contract are such as to show a different intention, there is an implied condition on the part of the seller, that :
- In case of a sale, he has a right to sell the goods, and
- In case of an agreement to sell, he will have a right to sell the goods at the time when the property is to pass. The words 'right to sell' contemplate not only that the seller has the title to what he purports to
sell, but also that the seller has the right to pass the property. If the seller's title turns out to be defective, the buyer may reject the goods. ii) Condition as to Description -- In a contract of sale by description, there is an implied condition that the goods shall correspond with the description. The term ' sale by description' includes the following situation ;
- Where the buyer has not seen the goods and buys them relying on the description given by the seller.
- Where the buyer has seen the goods but he relies not on what he has seen but what was stated to him and the deviation of the goods from the description is not apparent.
- Packing of goods may sometimes be a part of the description. Where the goods do not conform to be method of packing described (by the buyer or the seller) in the contract, the buyer can reject the goods. iii) Condition as to Quality or Fitness -- Where the buyer, expressly or by implication, makes known the seller the particular purpose for which goods are required, so as to show that the buyer relies on the seller's skill or judgment and the goods are of a description which it is in the course of the seller's business to supply (whether or not as the manufacturer of producer), there is an implied condition that the goods shall be reasonably fit for such purpose. In other words, this condition of fitness shall apply, if:
- The buyer makes known to the seller the particular purpose for which the goods are required,
- The buyer relies on the seller's skill or judgment ,
- The goods are of a description which he sellers ordinarily supplies in the course of his business, and
- The goods supplied are not reasonably fit for the buyer's purpose. iv ) Condition as to Merchantability -- Where the goods are bought by description from a seller, who deals in goods of that description (whether or not as the manufacturer or producer) there is an implied condition that the goods shall be of merchantable quality. Merchantable quality ordinarily means that the goods should be such as would be commercially saleable under the description by which they are known in the market at their full value. v) Condition as to Wholesomeness -- In case of sale of eatable provisions and foodstuff, there is another implied condition that the goods shall be wholesome. Thus, the provisions or foodstuff must not only correspond to their description, but must also be merchantable and wholesome. By 'wholesomeness' it means that goods must be for human consumption. vi) Condition Implied by Custom or Trade Usage: An implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade. In certain sale contracts, the purpose for which the goods are purchased may be implied from the conduct of the parties or from the nature or description of the goods. In such cases, the parties enter into the contract with reference to those known usage. For instance, if a person buys a perambulator or a medicine the purpose for which it is purchased is implied from the thing itself; the buyer need not disclose the purpose to the seller.
- Creditor – The creditor is the person who lends money to the principal debtor and is entitled to receive the loan back as the specified time period expires.
- Principal debtor – The principal debtor is the person who receives the loan from the creditor and it is the primary liability of the principal debtor to return the money back.
- Surety – The surety is a person who takes the guarantee that the principal debtor will return the money back. The surety is also called a guarantor. If the principal debtor fails to pay the loan amount then the creditor can ask the surety to repay the loan. Rights of a surety Rights against the creditor i) Right to securities with the creditor Section 141 of the Indian Contract Act,1872 has mentioned the right of surety to get a share in the security which has been kept while entering into the contract of guarantee. The place of surety is the same as the place of the creditor in terms of security. It is a compulsion on a creditor to share the security with the surety; it is irrelevant whether the surety was aware of the security or not. If the principal debtor defaults in the payment and the surety has cleared the dues, it makes the surety entitled for a share. ii) Loss of securities without creditor’s negligence Under this circumstance the creditor takes the security of the principal debtor in case of default of payment. The surety has the right to set-off the claim in respect to the value of security from the debt of the principal debtor. Illustration – A being the creditor gave a loan to B of Rs 2,00,000 on the surety of C. While B has kept his house on security in respect to the loan borrowed from A. B was in default to pay the loan of A. If A files a case against C for the repayment of the due amount, then C can claim discharge of the amount from the security which was recovered. Rights against the principal debtor i) Rights of subrogation Section 140 of the Indian Contract Act, 1872 has stated the right of subrogation. The right of subrogation means forming a new contract to recover the debt from the parties. As the surety has
paid the amount due in respect to default made by the principal debtor. Now the surety takes the place of the creditor and the principal debtor is entitled to pay the repaid loan amount which was paid on behalf of him to the creditor in the original contract of guarantee. ii) Rights of indemnity against the principal debtor Under Section 145 of the Indian Contract Act, 1872 it is mentioned to indemnify the surety. ‘To indemnify’ means that a party will pay the damages which are caused to the party in respect of fulfilment of the act of the promisor. Under the Contract of Guarantee the principal debtor is obliged to indemnify the surety in respect to the default of payment at the time of discharging the loan amount. It is not compulsory that the indemnity clauses should be mentioned in the contract; it is an implied duty of the principal debtor in respect to default of payment. iii) Securities received by the creditor after the contract of guarantee Section 141 of the Indian Contract Act, 1872 has mentioned the right of surety in the security which is mentioned in the contract of guarantee. If the principal debtor makes a default in payment of the loan amount and the payment is made by surety then in this case the surety can avail the benefit of security. If the amount is being deducted from security then in this case the surety can be discharged. Surety’s rights against the co-sureties i) Co-sureties right to get release from the contract Section 138 of the Indian Contract Act, 1872 has stated that if one surety is discharged from his liability it will not mean that all the sureties are also discharged from his obligation. Co-sureties here means that when more than one surety gives the guarantee or takes the obligation to pay the debt of the principal debtor. As per Section 138 when the principal debtor fails to pay the debt and if the creditor asks only one surety to fulfil his duty. In this case that surety can ask the other co-sureties to fulfil their responsibility. 2.Co-sureties are entitled to contribute equally Section 146 of the Indian Contract Act, 1872 has mentioned that the liabilities of co-securities are joint. If the contract does not mention the liability of co-securities as joint, it must be implied that all the co-securities will share equally the debt not paid by the principal debtor. 3.Co-sureties entitled to pay the amount as promised
