Section 133 of The Transfer of Property Act, 1882
Where the transferor of a debt warrants the solvency of the debtor, the warranty, in the absence of a contract to the contrary, applies only to his solvency at the time of the transfer, and is limited, where the transfer is made for consideration, to the amount or value of such consideration.
Summary
- When a person transferring a debt guarantees, or warrants, that the debtor is solvent, meaning able to pay, this guarantee only applies to the debtor's solvency at the exact time of the transfer.
- The guarantee does not cover any future insolvency of the debtor, unless there is a contract that says otherwise.
- If the transfer was made for a specific payment or consideration, the original creditor's liability under this guarantee is strictly limited to the amount or value of that consideration.
- It prevents a transferor from being indefinitely liable if a debtor becomes bankrupt years after the transfer.
Practical examples
FAQ
1. To what time period does a warranty of solvency apply under the Transfer of Property Act 1882 Section 133?
Under Section 133 of the Transfer of Property Act, 1882, in the absence of a contract to the contrary, a warranty of solvency of the debtor applies only to their solvency at the time of the transfer.
2. What is the limit of liability for a warranty of solvency under Section 133 of the Transfer of Property Act 1882?
Section 133 of the Transfer of Property Act, 1882 states that where the transfer is made for consideration, the liability under the warranty of solvency is limited to the amount or value of such consideration.
3. Can a transferor be held liable if a debtor becomes insolvent after the transfer under the Transfer of Property Act 1882 Section 133?
No, under Section 133 of the Transfer of Property Act, 1882, the transferor is not liable for future insolvency unless they have entered into a specific contract to the contrary that extends the warranty.
Test yourself
Q1.Under Section 133 of the Transfer of Property Act, 1882, if a transferor guarantees that the debtor is solvent, when does this guarantee apply, in the absence of an express agreement?
Q2.Under Section 133 of the Transfer of Property Act, 1882, if a debt of ten thousand rupees is transferred in exchange for five thousand rupees of consideration with a warranty of solvency, and the debtor is found to have been insolvent at the time of the transfer, what is the maximum amount the transferee can claim from the transferor under the warranty?
Q3.How can the parties to a transfer of debt extend the transferor's guarantee of a debtor's solvency to cover future insolvency under Section 133 of the Transfer of Property Act, 1882?
Q4.If a debt is transferred under Section 130 of the Transfer of Property Act, 1882 without any consideration, as a gift, and the transferor warrants the solvency of the debtor under Section 133 of the Act, what is the limit of the transferor's liability under Section 133 if the debtor was insolvent at the time of the transfer?