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 guarantee A’s performance of 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.

The correct answer is: A. A is liable on his guarantee.

A guarantee is a promise to pay a debt or perform an obligation if the person who is primarily liable does not do so. In this case, A is the primary obligor and C is the guarantor. If A does not perform his obligation to B, C is liable to pay B.

B’s diversion of the stream of water is a breach of contract by B. This breach of contract excuses A from his obligation to perform his contract with B. However, it does not excuse C’s obligation to perform his guarantee. C is still liable to pay B if A does not do so.

Here is a brief explanation of each option:

• Option A: A is liable on his guarantee. This is the correct answer. As explained above, A is the primary obligor and C is the guarantor. If A does not perform his obligation to B, C is liable to pay B.
• Option B: A is partly liable on his guarantee. This is not the correct answer. A is either liable or not liable on his guarantee. There is no such thing as being partly liable on a guarantee.
• Option C: A is no longer liable on his guarantee. This is not the correct answer. As explained above, A is still liable on his guarantee even though B has breached the contract.
• Option D: None of the above. This is not the correct answer. Option A is the correct answer.