The court in Firstrand Bank Limited v Barreiro reconfirmed that there is no general ‘prejudice principle’ which holds that a debtor or surety is released from their obligations to a creditor if the creditor does anything that prejudices them. The court reiterated that a surety can be released, either wholly or in part, from their
The respondent in Airports Company SA Limited v Masiphuze Trading (Pty) Ltd was unsuccessful in relying on the defence of justifiable error in trying to avoid being bound by a suretyship agreement that he signed but did not read.
The respondent entered into a suretyship for a lease debt in respect of premises at the
The service of a summons on one surety does not interrupt the running of prescription in favour of a co-surety. Although the surety undertakes to be liable if the principal debtor does not pay the debt, the surety does not become a co-debtor with the principal debtor, nor does the surety become a co-debtor with
Where an order was sought declaring immovable property specially executable but no facts had been placed before the court by the defendant, the court authorised the sale.
The court held that to deny an order declaring a property specially executable where the summons clearly draws a debtor’s attention to their right to lead evidence and
Prejudice to a surety will only release the surety from liability if the prejudice is the result of a breach of a legal duty or obligation owed by the creditor. The primary sources of a creditor’s duties and obligations are the principal agreement and the suretyship. If the prejudice complained of results from conduct falling
Without deciding the point, the Supreme Court of Appeal in New Port Finance Company (Pty) Ltd v Nedbank Limited held that the decision in Tuning Fork (Pty) Limited v Greeff may not be correct in saying that where the principal debts are diminished or expunged by a business rescue plan the sureties are released accordingly.
The latest appeal court decision of New Port Finance Co v Nedbank reinforces our view that every suretyship securing a company’s debts should specifically preserve the creditor’s rights against a surety despite discharge of any part of the principal debt by a business rescue plan and that creditors should ensure that claims against sureties are
Every suretyship securing a company’s debts should specifically preserve the creditor’s rights to recover from the surety despite discharge of the principal debt in a business rescue plan. And every business rescue plan should, if possible, contain a provision preserving rights against sureties.
If a debtor company is in business rescue, its creditors may call