Suretyship Issue 2

A contract of suretyship is concluded by agreement between the creditor and the surety.

The normal requirements for conclusion of a valid contract have to be met.

Therefore there must be a proper offer and acceptance and the parties must have the intention that the surety will be bound as such.

The principal debtor does not have to be a party to the contract and in fact does not have to know of its existence.

Any person who has contractual capacity can generally be bound as a surety.

However, a minor who has been tacitly emancipated cannot do so without the consent of his or her guardian, and a person married in community of property normally needs the consent of the other spouse.

The General Law Amendment Act 50 of 1956 provides that a contract of suretyship shall be in writing and that the written document shall only be valid if it is also signed by or on behalf of the surety.

This Act thus requires that the principal debtor, the creditor, the surety and the principal debt shall be identified in the document.

If the contract identifies more than one surety and it is the intention that each of them will only be liable if all the others are also liable, the contract must be signed by all the co-sureties.

Since the liability of the surety is accessory to the original agreement between the creditor and the principal debtor, the surety cannot be liable for more than the principle debt.

The surety may render himself or herself liable for less than the principal debt.

Further on the Biblical perspective in terms of Surety.

Proverbs 11:15 read with Proverbs 6:1-2

“He that is surety for a stranger shall smart for it: and he that hateth suretyship is sure”.

“My son, if thou be surety for they friend, if thou hast stricken they hand with a stranger, thou art snared with the words of thou mouth, thou art taken with the words of thou mount.”

But what does this mean?

Being surety or pledging to stand good for anyone tends to relieve him of the responsibility he should feel and seldom leaves a co-signer as much respected by the one he helps as before.