This blog was co-authored by Adrienne Hendricks (Trainee Associate).

An insurance company entered into a financial service agreement with the first respondent close corporation. The second respondent bound herself as surety and co-principal debtor to the insurance company through a deed of suretyship. Pursuant to the deed of suretyship, the insurance company sought payment from the second respondent for the first respondent’s debts, together with interest and costs on an attorney-client scale.

The second respondent challenged the validity of the deed of suretyship, arguing it was invalid due to non-compliance with section 6 of the General Law Amendment Act and sections 13, 37, and 38 of the Electronic Communications and Transactions Act (ECTA).

According to Section 6 of the General Law Amendment Act, a suretyship agreement must be written and signed by the surety to be valid.

Section 13 of ECTA states that when a “signature” is legally required, as in the case of a suretyship, this requirement is only fulfilled by using an advanced electronic signature. An advanced electronic signature is defined as an electronic signature resulting from a process accredited by the Accreditation Authority.

It was common cause between the parties that the electronic signature used by the second respondent when signing the Deed of Suretyship was not an advanced electronic signature. The court found the second respondent’s argument untenable as she had admitted to binding herself as a surety in favour of the insurance company.

The court’s decision emphasises the significance of understanding legal formalities in suretyship contracts, particularly the implications of electronic signing under South African law. The court’s substance over form approach is encouraging.  

The full judgment can be accessed here: Momentum Metropolitan Life Limited v Lavender Hill Trading 544 CC and Another (19204/23) [2025] ZAWCHC 99 (11 March 2025)