Section 82

A, in consideration that B will employ C in collecting the rents of B’s estate, promises B to be responsible to the amount of $5,000 for the due collection and payment by

C of those rents. This is a continuing guarantee.

A guarantees payment to B, a tea dealer, to the amount of $1,000 for any tea he may from time to time supply to C. B supplies C with tea to above the value of $1,000 and C pays B for it. Afterwards, B supplies with tea to the value of $2,000. C fails to pay. The guarantee given by A was a continuing guarantee and he is accordingly liable to B to the extent of $1,000.

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A guarantees payment to B of the price of five sacks of flour to be delivered by B to

C and to be paid for in a month. B delivers five sacks to C. C pays for them. Afterwards B delivers four sacks to C, which C does not pay for. The guarantee given by A was not a continuing guarantee, and accordingly he is not liable for the price of the four sacks.

Revocation of continuing guarantee 83.

A continuing guarantee may at any time be revoked by the surety, as to future transactions, by notice to the creditor.

Illustrations

A, in consideration of B’s discounting, at A’s request, bills of exchange for C, guarantees to B, for 12 months, the due payment of all such bills to the extent of $5,000.

B discounts bills for C to the extent of $2,000. Afterwards, at the end of 3 months, A revokes the guarantee. This revocation discharges A from all liability to B for any subsequent discount. But A is liable to B for the $2,000 on default of C.

A guarantees to B, to the extent of $10,000, that C shall pay all the bills that B shall draw upon him. B draws upon C. C accepts the bill. A gives notice of revocation.

C dishonours the bill at maturity. A is liable upon his guarantee.

Revocation of continuing guarantee by surety’s death 84.

The death of the surety operates, in the absence of any contract to the contrary, as a revocation of a continuing guarantee, so far as regards future transactions.

Liability of two persons, primarily liable, not affected by arrangement between them that one shall be surety on other’s default 85.

Where two persons contract with a third person to undertake a certain liability and also contract with each other that one of them shall be liable only on the default of the other, the third person not being a party to such contract, the liability of each of such two persons to the third person under the first contract is not affected by the existence of the second contract, although such third person may have been aware of its existence.

Illustration

A and B make a joint and several promissory note to C. A makes it, in fact, as surety for B and C knows this at the time when the note is made. The fact that A, to the knowledge of C, made the note as surety for B, is no answer to a suit by C against A upon the note.

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Discharge of surety by variance in terms of contract 86.

Any variance, made without the surety’s consent, in the terms of the contract between the principal debtor and the creditor, discharges the surety as to transactions subsequent to the variance.

Illustrations

A becomes surety to C for B’s conduct as a manager in C’s bank. Afterwards, B and C contract, without A’s consent, that B’s salary shall be raised and that he shall become liable for one-fourth of the losses on overdrafts. B allows a customer to overdraw, and the bank loses a sum of money. A is discharged from his suretyship by the variance made without his consent and is not liable to make good this loss.

A guarantees C against the misconduct of B in an office to which B is appointed by C and of which the duties are defined by an Act. By a subsequent Act, the nature of the office is materially altered. Afterwards, B misconducts himself. A is discharged by the change from future liability under his guarantee, though the misconduct of B is in respect of a duty not affected by the later Act.

C agrees to appoint B as his clerk to sell goods at a yearly salary, upon A’s becoming surety to C for B’s duly accounting for moneys received by him as such clerk. Afterwards, without A’s knowledge or consent, C and B agree that B should be paid by a commission on the goods sold by him and not by a fixed salary. A is not liable for subsequent misconduct of B.

A gives to C a continuing guarantee to the extent of $3,000 for any oil supplied by C to B on credit. Afterwards, B becomes embarrassed and, without the knowledge of A, B and C contract that C shall continue to supply B with oil for ready money and that the payments shall be applied to the then existing debts between B and C. A is not liable on his guarantee for any goods supplied after this new arrangement.

C contracts to lend B $5,000 on 1st March. A guarantees repayment. C pays the $5,000 to B on 1st January. A is discharged from his liability, as the contract has been varied, in as much as C might sue B for the money before 1st March.

Discharge of surety by release or discharge of principal debtor 87.

The surety is discharged by any contract between the creditor and the principal debtor by which the principal debtor is released or by any act or omission of the creditor, the legal consequence of which is the discharge of the principal debtor.

Illustrations

A gives a guarantee to C for goods to be supplied by C to B. C supplies goods to B and afterwards B becomes embarrassed and contracts with his creditors (including C) to

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assign to them his property in consideration of their releasing him from their demands. Here,

B is released from his debt by the contract with C and A is discharged from his suretyship.

A contracts with B to grow a crop of indigo on A’s land and to deliver it to B at a fixed rate and C guarantees A’s performance for this contract. B diverts a stream of water which is necessary for irrigation of A’s land and thereby prevents him from raising the indigo. C is no longer liable on his guarantee.

A contracts with B for a fixed price to build a house for B within a stipulated time, B supplying the necessary timber. C guarantees A’s performance of the contract. B omits to supply the timber. C is discharged from his suretyship.

Discharge of surety when creditor compounds with, gives time to, or agrees not to sue principal debtor 88.

A contract between the creditor and the principal debtor by which the creditor makes a composition with, or promises to give time to or not to sue, the principal debtor, discharges the surety, unless the surety assents to such contract.

Surety not discharged when agreement made with third person to give time to principal debtor 89.

Where a contract to give time to the principal debtor is made by the creditor with a third person, and not with the principal debtor, the surety is not discharged.

Illustration

C, the holder of an overdue bill of exchange drawn by A, as surety for B, and accepted by

B, contracts with M to give time to B. A is not discharged.

Creditor’s forbearance to sue does not discharge surety 90.

Mere forbearance on the part of the creditor to sue the principal debtor or to enforce any other remedy against him does not, in the absence of any provision in the guarantee to the contrary, discharge the surety.

Illustration

B owes to C a debt guaranteed by A. The debt becomes payable. C does not sue B for a year after the debt has become payable. A is not discharged from his suretyship.

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Release of one co-surety does not discharge others 91.

Where there are co-sureties, a release by the creditor of one of them does not discharge the others; neither does it free the surety so released from his responsibility to the other sureties.

Discharge of surety by creditor’s act or omission impairing surety’s eventual remedy 92.

If the creditor does any act which is inconsistent with the rights of the surety, or omits to do any act which his duty to the surety requires him to do, and the eventual remedy of the surety or omission himself against the principal debtor is thereby impaired, the surety is discharged.

Illustrations

B contracts to build a ship for C for a given sum, to be paid by instalments as the work reaches certain stages. A becomes surety to C for B’s due performance of the contract.

C, without the knowledge of A, prepays to B the last two instalments. A is discharged by this payment.

C lends money to B on the security of a joint and several promissory note made in

C’s favour by B, and by A as surety for B, together with a bill of sale of B’s furniture, which gives power to C to sell the furniture and apply the proceeds in discharge of the note.

Subsequently, C sells the furniture but, owing to his misconduct and wilful negligence, only a small price is realised. A is discharged from liability on the note.

A puts M as apprentice to B, and gives a guarantee to B for M’s fidelity. B promises on his part that he will, at least once a month, see M make up the cash. B omits to see this done as promised, and M embezzles. A is not liable to B on his guarantee.

Rights of surety on payment or performance 93.

Where a guaranteed debt has become due, or default of the principal debtor to perform a guaranteed duty has taken place, the surety, upon payment or performance of all that he is liable for, is invested with all the rights which the creditor has against the principal debtor.

Surety’s right to benefit of creditor’s securities 94.

A surety is entitled to the benefit of every security which the creditor has against the principal debtor at the time when the contract of suretyship is entered into, whether the surety knows of the existence of such security or not; and, if the creditor loses or, without the consent of the surety, parts with such security, the surety is discharged to the extent of the value of the security.

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Illustrations

C advances to B, his tenant, $2,000 on the guarantee of A. C has also a further security for the $2,000 by a mortgage of B’s furniture. C cancels the mortgage. B becomes insolvent and C sues A on his guarantee. A is discharged from liability to the amount of the value of the furniture.

C, a creditor, whose advance to B is secured by a decree, receives also a guarantee for that advance from A. C afterwards takes B’s goods in execution under the decree and then, without the knowledge of A, withdraws the execution. A is discharged.

A, as surety for B, makes a bond jointly with B to C, to secure a loan from C to B.

Afterwards, C obtains from B a further security for the same debt. Subsequently, C gives up the further security. A is not discharged.

Guarantee obtained by misrepresentation invalid 95.

Any guarantee which has been obtained by means of misrepresentation made by the creditor, or with his knowledge and assent, concerning a material part of the transaction, is invalid.

Guarantee obtained by concealment invalid 96.

Any guarantee which the creditor has obtained by means of keeping silence as to material circumstances is invalid.

Illustrations

A engages B as clerk to collect money for him. B fails to account for some of his receipts and A in consequence calls upon him to furnish security for his duly accounting.

C gives his guarantee for B’s duly accounting. A does not acquaint C with B’s previous conduct. B afterwards makes default. The guarantee is invalid.

A guarantees to C payment for iron to be supplied by him to B to the amount of 2,000 tons. B and C have privately agreed that B should pay $5 per ton beyond the market price, such excess to be applied in liquidation of an old debt. The agreement is concealed from A. A is not liable as a surety.

Guarantee on contract that creditor shall not act on it until co-surety joins 97.

Where a person gives a guarantee upon a contract that the creditor shall not act upon it until another person has joined in it as co-surety, the guarantee is not valid if that other person does not join.

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Implied promise to indemnify surety 98.

In every contract of guarantee there is an implied promise by the principal debtor to indemnify the surety, and the surety is entitled to recover from the principal debtor whatever sum he has rightfully paid under the guarantee, but no sums which he has paid wrongfully.

Illustrations

B is indebted to C and A is surety for the debt. C demands payment from A and on his refusal, sues him for the amount. A defends the suit, having reasonable grounds for doing so, but is compelled to pay the amount of the debt with costs. He can recover from B, the amount paid by him for costs as well as the principal debt.

C lends B a sum of money and A, at the request of B, accepts a bill of exchange drawn by B upon A to secure the amount. C, the holder of the bill, demands payment of it from A and, on A’s refusal to pay, sues him upon the bill. A, not having reasonable grounds for so doing, defends the suit, and has to pay the amount of the bill and costs. He can recover from B, the amount of the bill, but not the sum paid for costs as there was no real ground for defending the action.

A guarantees to C, to the extent of $2,000, payment for rice to be supplied by C to B.

C supplies to B rice to a less amount than $2,000, but obtains from A payment of the sum of $2,000 in respect of the rice supplied. A cannot recover from B more than the price of the rice actually supplied.

Co-sureties liable to contribute equally 99.

Where two or more persons are co-sureties for the same debt or duty, either jointly or severally, and whether under the same or different contracts, and whether with or without the knowledge of each other, the co-sureties, in the absence of any contract to the contrary, are liable, as between themselves, to pay each an equal share of the whole debt, or of that part of it which remains unpaid by the principal debtor.

Illustrations

A, B and C are sureties to D for the sum of $3,000 lent to E. E makes default in payment. A, B and C are liable, as between themselves, to pay $1,000 each.

A, B and C are sureties to D for the sum of $1,000 lent to E and there is a contract between A, B and C that A is to be responsible to the extent of one-quarter, B to the extent of one-quarter and C to the extent of one-half. E makes default in payment. As between the sureties, A is liable to pay $250, B $250, and C $500.

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Liability of co-sureties bound in different sums 100.

Co-sureties who are bound in different sums are liable to pay equally as far as the limits of their respective obligations permit.

Illustrations

A, B and C, as sureties for D, enter into three several bonds, each in a different penalty namely, A in the penalty of $10,000, B in that of $20,000, C in that of $40,000, conditioned for D’s duly accounting to E. D makes default to the extent of $30,000. A, B and

C are each liable to pay $10,000.

A, B and C, as sureties for D, enter into three several bonds, each in a different penalty namely, A in the penalty of $10,000, B in that of $20,000, C in that of $40,000, conditioned for D’s duly accounting to E. D makes default to the extent of $40,000. A is liable to pay $10,000, and B and C $15,000.

A, B and C, as sureties for D, enter into three several bonds, each in a different penalty namely, A in the penalty of $10,000, B in that of $20,000, C in that of $40,000, conditioned for D’s duly accounting to E. D makes default to the extent of $70,000. A, B and

C have to pay each the full penalty of his bond.

PART 8A [S 3/2016]

Scholarship Agreements

Application to all scholarship agreements 100A.

This Part applies to all scholarship agreements entered into before or after 28th January 2016.

Interpretation 100B.

In this Part, unless the context otherwise requires —

“appropriate authority” means the Government, a statutory authority or an approved educational institution;

“approved educational institution” means any institution or body declared as such by the Minister under section 100C;

“scholarship agreement” means any contract or agreement between an appropriate authority and any person (in this Act referred to as a scholar) with respect to, any scholarship, award, bursary, loan, sponsorship or appointment to a course of study, the provision of leave with or without pay, or any other facility, whether granted

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directly by the appropriate authority, or by any other person or body, or by any government outside Brunei Darussalam, for the purpose of education or learning of any description;

“statutory authority” means a body corporate established by or under any written law to perform or discharge any public function;

“surety” means a person referred to as a surety, or as a guarantor, or by any other corresponding term, in a scholarship agreement.

Approved educational institution 100C.

The Minister of Finance and Economy may, by notification published in the Gazette, declare any institution or body, whether corporate or unincoporate, to be an approved educational institution for the purposes of this Act.

Validity of scholarship agreement 100D.

Notwithstanding anything to the contrary contained in the Act, no scholarship agreement shall be invalidated on the ground that —

the scholar entering into the agreement is not of the age of majority;

the agreement is contrary to any provision of any written law in force relating to moneylenders; or

the agreement lacks consideration.

Remedy in event of breach 100E.

Where a scholarship agreement has been breached by a scholar —

if a sum is named in the agreement as the amount to be paid in case of such breach, notwithstanding anything to the contrary contained in this Act, the scholar and the surety shall be liable jointly and severally to pay and the appropriate authority shall be entitled to be paid the whole of the sum whether or not actual damage or loss has been caused by the breach, and no deduction shall be made from the sum on account of any partial period or service performed by the scholar on completion of his course of study; or

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if no such sum is mentioned in the scholarship agreement, the scholar and the surety shall be jointly and severally liable to pay and the appropriate authority shall be entitled to be paid —

the whole amount expended by the appropriate authority under the agreement; and