(1) Except as
otherwise provided for in the contract, the surety shall be in
discharge of his or her obligation to the following extent, in any of
the following circumstances:
(a) If the principal debtor so alters the terms and
conditions of the contract without the surety's consent
as to have substantial impact on the contract, in respect
of the transactions subsequent to the alteration,
(b) If a contract is concluded to discharge the principal
debtor from the obligation for which the guarantee was
given,
(c) If the principal debtor is discharged from the obligation
by an act or action of the creditor or the loan is written
off,
(d) If the creditor agrees to discharge the debtor from the
liability by recovering a sum less than that is due or to
give additional time for repaying the loan or not to
institute a lawsuit,
(e) If any act or action by the creditor causes an adverse
impact to the surety's right to legal remedy against the
principal debtor,
(f) If the creditor loses, damages any security obtained by
him or her from the principal debtor or returns it to the
principal debtor, to the extent of the value of such
security,
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(g) To the extent to which the principal debtor has repaid
the loan or discharged the obligation to the creditor
according to the contract.
(2) Notwithstanding anything contained in sub-section (1),
the surety shall not be deemed to be in discharge of obligation,
except as otherwise provided in the contract, merely because the
creditor fails to institute legal action against the surety or attempt to
recover the amount to be recovered by him or her in time.
(3) If there are two or more sureties and the creditor
discharges one co-surety from obligation, the other co-sureties shall
not be discharged from their respective part of obligation.
(4) Notwithstanding anything contained in sub-section (3),
if the part of the co-sureties' obligation cannot be separated, no cosurety
shall be deemed to be in discharge of his or her obligation
even though the creditor has discharged him or her from the
obligation.
(5) Except as otherwise provided for in the contract, the
surety shall not be in discharge of obligation under the contract of
guarantee merely because there arises a dispute between the parties
in relation to the contract creating the obligation for the discharge
of which the contract of guarantee is made.