Class notes
Intro to suretyship
- Course
- BER 220 (BER220)
- Institution
- University Of Pretoria (UP)
Lecture notes of 5 pages for the course BER 220 at UP (Notes on suretyship)
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CHAPTER 18GENERAL INTRODUCTION AND
SURETYSHIP
GENERAL INTRODUCTION
The regulation of the legal relationship between creditors and debtors is a characteristic of
any developed community.
The debt relationship (obligation) is created by a delict, a contract, or any one of various
other legal causes :
- Negotiorum Gestio
- Enrichment
A creditor may, in certain circumstances, demand some form of security in order to protect
himself/herself against the possibility of the debtor not being able to pay his/her debt when it
falls due
The creditor may require that a third party bind him/herself contractually for the
performance of the debtors obligation, in which case we are dealing with personal security
known as suretyship.
Real security:
- If the debtor has assets, the creditor may request him/her to bind all or part of his/her
assets as security for the debt
In most instances real security is preferred to personal security because of the advantages it
has for the creditor.
- The creditor, apart from his/her personal right against the debtor. Merely obtains an
additional personal right against the surety
- The creditor is still at risk that he/she will get performance neither from the principal
debtor nor from the surety (who is also a debtor)
- In contrast, in the event of real security a specific thing is identified to secure the
performance of the obligation by the debtor.
- The creditor with real security, therefore, enjoys priority in this respect over other
creditors without such security
, NB!
Personal and real security are dependent on the existence of a so-called principal debt or
obligation, which entails that the security can exist only insofar and for as long as the
principal debt exists.
- For this reason, suretyship is said to be of an accessory nature
• As a rule, there should be a valid principal obligation between the debtor and
the creditor
The law of security is intertwined with the granting of credit
- The National Credit Act 34 of 2005 regulated various aspects regarding the granting
of credit by means of credit agreements regulated by this Act.
- To some extent, some forms of security provided in return for credit will also be
affected.
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