Surety is a love or hate term depending on which side of the equation you are on. If you are a creditor, you may have heard a thousand times over that it is a necessity to have. If you are the debtor you likely fear signing it but really had no other option. Below we discuss a few surprising facts about surety.


Surety is governed for the most part by the law of contract, which is based on the Roman Dutch heritage law. Thus, no easy to find and read legislation. This burden was somewhat alleviated by the General Law Amendment, 1956 that imposes certain requirements for a surety to be valid. These requirements are that the deed surety must be in writing and that it must be signed by or on behalf of the surety.


This requirement was brought into existence by the General Law Amendment Act. Prior to this legislation, surety could have been given in verbal form. Including this requirement creates certainty that a promise to make good on a debt that is not one’s own, does not create a verbal surety, especially unintentionally. The lack of a written deed of surety therefore is a presumption that there is no surety provided.

The fact that the surety must be in writing, does not mean that it has to be a separate distinct agreement. It can be included in the master agreement between two parties and will then meet this requirement. It has to however, meet the further criteria as well to be valid and enforceable.


It is a requirement of the General Law Amendment Act that a deed of surety must be signed. A deed of surety included in a larger agreement between two entities wherein the creditor wishes to include a deed of surety, cannot rely on the signature of the said surety only on the main agreement. The deed of surety itself should be signed by or on behalf of the surety. Thus, if an agreement between two companies is signed only on the last page and by the intended surety in his capacity as representative of the company, it cannot be accepted that the deed of surety meets the signature requirement.

A deed of surety constitutes a further agreement to that between the main parties and serves to safeguard the interests of the creditor in providing a second viable chance of collection of the anticipated amounts due. This agreement thus must be distinguishable from the main agreement and must be signed purposefully.


The Electronic Communications and Transactions Act, 2002, has opened the door for agreements to be concluded far more easily than attempting to have everything placed on actual paper and signed with ink. The ECT Act allows for a contracting party to use an electronic signature and even to ‘sign’ an agreement by clicking accept on a prompt. Original documents and signatures are no longer a hurdle in the modern business world and the majority of signatures and agreements are virtually concluded.

Should the validity of an electronic signature be placed into dispute then the integrity of the data message and system it was generated and transmitted from, must be verified.


The General Law Amendment Act allows for a surety to conclude same by a representative signing the deed of surety. As an example, the CEO of a company may mandate his personal assistant to sign the surety on his behalf if he is physically unable to. The signature on behalf of the surety is an acceptable signature and does not in any way take away from the validity of the document.

Naturally, if the signature on the deed of surety is not that of the surety and it is disputed by the surety when called upon, the holder of the surety (creditor) will be required to prove that the surety indeed signed or that the document was signed on his or her behalf.


Formally registering a company or close corporation means that the so-called owner of the company’s personal estate is safe from execution by the creditors of the company. The company is a separate legal entity with its own estate and the estate of the owner or any of the employees involved are separate and cannot be considered when attempting to collect from the company.

This poses an issue with collecting debt from a creditor standpoint, as companies are fallible and can easily become insolvent and be closed down, or just stop trading. This is why creditors mostly insist on securing a surety that they will be able to execute on, even in the event that the company is liquidated or has no assets to attach. A person (surety) cannot just “close down” or liquidate overnight without any repercussions. Should a person become insolvent and be declared as such, the person will have very limited economic powers going forward and therefore most people avoid this at all costs. Companies however, on liquidation, give little hope of any recovery for creditors.

The solution? Have a director or shareholder of the company sign surety. This means that, if the company liquidates, the creditor may still hold the surety accountable. It literally gives the creditor double the chance at success should it ever have to pursue the debtor for outstanding money.


In general deeds of surety are not worded in a manner that is at all beneficial to the surety. It will usually be for an unlimited amount and for an unlimited period of time.

It is important to note that the basic principles of law of contracts dictate that parties are for the most part free to enter into any agreement that they deem fit. This principle is underlined in BOTHA & ANOTHER V FINANSCREDIT 1989 in which matter the judge emphasised that the Court will in general not intrude on a contracting party’s freedom unless the contents or outcome of the contract is contrary to public policy. When determining whether a contract is contrary to public policy, it should be considered that, while public policy generally favours the utmost freedom of contract, it nevertheless takes into account the necessity of doing simple justice between man and man and that a Court’s power to declare a contract contrary to public policy must be exercised sparingly and only where impropriety and the element of public harm are manifest.

We have done a full discussion on contractual freedom, which article may be found here  -> https://www.vermeulenlaw.co.za/contractual-freedom/

Having regard to the above extract from the guiding case on contractual freedom, it is clear that a surety that is for an unlimited amount and time clearly is not out of the scope of contractual freedom and will likely be honoured by a Court should it be posed the question to enforce.

It remains the responsibility of the person signing surety to question or dispute the content prior to signature thereof.


When the Court is posed with deciding a matter where a surety is involved and the surety has defended such action, there are not a lot of defences that the surety can legitimately raise.

The defences to a surety claim are usually limited to a lack of consensus (that the surety meant to provide surety) or that the legislative requirements of the deed of surety was not met.

Defences to surety based on consensus would usually be formulated along the following lines:

  1. That the surety was coerced or forced into signature of the surety;
  2. That the surety was not of sound mind at the time of signature or any other form of lack of mental capacity to so sign;
  3. That the signature on the deed of surety does not belong to the surety and he or she did not instruct a third party to sign on their behalf.

The possible defences in respect of legislation would be that the surety is not in writing and/ or signed as required.

An interesting case on surety and wherein a defence was raised that the surety did not read the document prior to signature is the matter of ACSA v Masiphuze Trading (Pty) Ltd and 3 others (Unreported) [http://www.saflii.org/za/cases/ZASCA/2019/150.html] The judge found that the defence of not having read the surety prior to signature thereof, did not constitute a valid defence to the surety.

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