In these uncertain times, a suretyship agreement as a form of security is no longer a nice to have, but instead, a must-have.
A surety’s liability arises from the time the principal debtor is in default, provided an enforceable claim is proved.
The onus rests on the creditor to allege and prove the following:
- A valid contract of suretyship;
- That the cause of debt is one in respect of which the surety undertook liability;
- The indebtedness of the principal debtor is the amount that it is due and payable.
In respect of the debt of a company which is subject to business rescue proceedings, there is legal authority that in the absence of an express provision in the business rescue plan for sureties, their liability remains unaffected by the business rescue proceedings, and they cannot claim the benefit of the moratorium business rescue affords the debtor company.
If you wish to enforce the terms of suretyship agreement or conclude a suretyship agreement with your customers, please feel free to reach out to us for assistance.
For professional legal advice, contact Kugen Pillay at Goldberg & de Villiers Inc. on 041 501-9800 | kugen@goldlaw.co.za today.