In Brief
Archean Industries agreed to remit US$100,000 in freight proceeds to Goltens Dubai for ship repairs, issuing a "Corporate Guarantee" to ensure payment. Canara Bank, instructed to remit the funds, erroneously transferred them to the vessel owner instead. The Supreme Court held that Archean Industries' written undertaking constituted a valid contract of guarantee under the Indian Contract Act. The bank's error—transferring funds contrary to explicit customer instructions—made it liable. The Court affirmed that the bank must comply with customer instructions and cannot unilaterally divert payments without authorization.
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