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Surety – A Lifelong Sentence?



Surety – A Lifelong Sentence: Shirley signed surety in favour of ZA Bank on a finance agreement concluded between the company at which she is a director, called Lift Services; and ZA Bank. The agreement concluded was for vehicle asset finance. The capital, plus interest and charges, amount to a sum of R500 000,00. Five years after signing the said surety document, Shirley is working for another company. Lift Services has since run into some financial woes and as a result, Shirley receives a summons in which she is sued jointly with Lift Services for an amount due to ZA Bank, in terms of a vehicle finance agreement.

Shirley is sure that the agreement for which she signed surety was paid in full and she consults an attorney with regards to the summons. On consultation, it is clear that the cause of action on which the summons is issued, is for vehicle finance- but is a different agreement than the one Shirley signed surety on.

Surely the bank cannot hold her accountable on a surety that she signed for a specific agreement for eternity?

The First Question, What Is Surety?

Surety is signed on behalf of a company, usually by a director or shareholder thereof, and in favour of a creditor. This ensures that, if the company does not make good on its contractual duty of payment, that the creditor may approach the surety to demand payment on the company’s behalf. A surety is a contract between the creditor and him or herself and needs to be regarded in this light.

How Are Sureties Worded?

The wording of a typical surety will be in line with the following:

‘I [surety] hereby interpose and bind the surety as surety and co-principal debtor in solidum to [Creditor] for the due and proper payment of all amounts which the debtor is at present owing or will in future be owing to the [creditor], whether as borrower or as surety and whether jointly with others or arising from any other cause whatsoever and notwithstanding any fluctuation in the amount of the indebtedness or even the temporary extinction thereof, as well as due and proper fulfilment by the debtor of all other present and future obligations of whatsoever nature.’

As is evident from the above, it seems that signature of a surety will bind the surety into perpetuity and does not expire. Is this reasonable?

Contractual Freedom

The South African Law of Contracts, which is largely based on the Roman Dutch law inherited by our country, allows for contracting parties to do so on the terms that they deem fit. This is referred to as contractual freedom. The Courts will always tread with caution when contemplating intruding on voluntarily agreements.

In BOTHA (NOW GRIESSEL) AND ANOTHER v FINANSCREDIT (PTY) LTD 1989, the Judge emphasises that the Courts will not intrude on a contracting party’s freedom unless the contents or outcome of such contract, is contrary to public policy.

In investigating whether a contract is contrary to public policy, it should be borne in mind that, while public policy generally favours the utmost freedom of contract, it nevertheless takes into account the necessity for doing simple justice between man and man, and that a court’s power to declare a contract contrary to public policy should be exercised sparingly and only where impropriety and the element of public harm are manifest.

Therefore, it is evident that contracting parties may contract on terms of their choosing with very little limitation in this regard.

 What Does This Mean For Sureties?

Unfortunately, having contractual freedom means that a creditor may draft a surety document on the terms that is best suited to it; much like the wording noted above. The surety is almost always worded in a manner as to bind the surety for any given amount and for an indefinite period in favour of the creditor.

The surety should therefore read the wording beforehand and be equipped to understand it, and request changes if it is prejudicial towards him or her.

How Can I Ensure That The Surety Does Not Enslave Me?

The suretyship being a contract- you have contractual freedom to ensure that you are satisfied with the terms before signing the document. Here are our suggestions regarding limiting the impact a surety could have:

  1. Ensure that the surety is in respect of only the debt that you are signing surety for. The capital amount, asset purchased, or full descriptions must be noted.
    As an example: when Shirley signed surety on behalf of Lift Services for a vehicle, she should have ensured that the surety reads as follows:‘I, Shirley, hereby interpose and bind the surety as surety and co-principal debtor in solidum to ZA Bank for the due and proper payment of the amount of R500 000 being the capital, interest and costs in respect of vehicle asset finance with account number 10294382’Shirley now knows that she will only be liable for the specific debt that she signed surety for and not any further transactions that Lift Services may conclude with ZA Bank.


  1. You could structure the surety to be valid only for a limited time and that it expires upon a certain event happening or effluxion of time.
    ‘I Shirley hereby interpose and bind the surety as surety and co-principal debtor in solidum to ZA Bank for the due and proper payment of all amounts, which the debtor is at present owing or will in future be owing to ZA Bank, such guarantee to expire on 1 December 2020.’ This means that Shirley will be bound only for debts incurred by Lift Services until the date of 1 December 2020. Any agreements or debts incurred by them thereafter will not be covered by her suretyship.


  1. A further limitation that could be put in place is a monetary one wherein a guarantee is given only for a specific amount of money, see below example:
    ‘I Shirley hereby interpose and bind the surety as surety and co-principal debtor in solidum to ZA Bank for the due and proper payment of all amounts, subject to a maximum amount of R250 000,00; which the debtor is at present owing or will in future, be owing to the ZA Bank.’This will ensure that Shirley only stands surety to a maximum amount of R250 000,00 and any claims that the bank may bring against her, will be limited to this amount even if the claim amount in the summons far exceeds it, judgment against Shirley will be limited to R250 000,00.


Can I Cancel Surety?

It must be noted that cancellation of a surety will have to be done according to the agreement itself. Therefore, it is critical to read the agreement before signing it.

Once the debtor has, however fulfilled its duties in terms of the agreement, the surety should be able to cancel the suretyship. In our case study, Shirley should therefore have been able to cancel the surety once the vehicle had been repaid. However, she did not, and Lift Service went on to conclude more agreements with ZA Bank, binding Shirley to these debts as well.

Should a surety decide to cancel the suretyship at any given time and such suretyship is a requirement for the creditor to provide credit, the creditor may in turn cancel the agreement. The cancellation, however, should not carry any penalties for the surety unless the debtor owes amounts to the creditor at that stage.


In answer to our case study, Shirley is bound by the surety that has no limits to the time or amount that the bank may claim. She may be able to defend the action on the basis that the surety was signed in respect of a certain agreement, but this not being stipulated will present an issue for her defence.

Before signing a surety, it is important to read the document and obtain advice from your attorney to ensure that you do not enter any agreements that may negatively affect you in the long run.

The Courts have found that a defence claiming to not have read a surety and therefore not being bound thereto is not a valid defence, see herewith the a unreported case in this regard.

It is therefore critical to read and understand any agreements you enter into, and to obtain advice when needed. Please contact our offices for advice regarding such agreements or when faced with litigation due to a surety that you have signed.

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