Tag archives: Surety

No general ‘prejudice principle’ protecting sureties

By Olivia Radford and Lisa Ellefsen on September 13, 2020 Posted in General

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 obligations … Continue reading

Defence of justifiable error in signing a suretyship fails

By Patrick Bracher (ZA) on May 17, 2020 Posted in General

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 … Continue reading

Service of summons on one surety does not interrupt running of prescription for other sureties

By Siyabonga Mathe on April 22, 2020 Posted in General

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 … Continue reading

Judicial oversight of execution against property requires full facts before court

By Riccardo Petersen (ZA) and Vishana Makan on July 3, 2019 Posted in Banking

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 … Continue reading

Proving prejudice not sufficient for surety to escape liability

By Aslam Moosajee (ZA) on November 18, 2015 Posted in Banking

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 … Continue reading

Sureties may not be affected by business rescue plan

By Riza Moosa on January 28, 2015 Posted in Banking

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. … Continue reading

Business rescue and sureties

By Aslam Moosajee (ZA) on December 1, 2014 Posted in Banking

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 preserved … Continue reading

Can you claim against a surety if the debtor is in business rescue?

By Riza Moosa on July 25, 2014 Posted in Banking

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 on … Continue reading