Lex-pedia

Is it a Suretyship or a Guarantee? A suretyship is as an agreement in terms of which a third party, namely the surety, agrees to be liable  towards a creditor for the proper performance of a given obligation. A surety may agree to be fully or partially liable for the performance of a debtor. Typically, suretyship agreements are concluded in pursuance of a credit transaction whereby a surety agrees to settle all debts (or a portion thereof) should the principal debtor fail to do so.   A suretyship is not to be confused with a guarantee although a guarantee may amount to a contract of suretyship (see  List v Jungers 1979 (3) SA 106 (A)) . What clearly distinguishes a guarantee from a suretyship is that a guarantee does  not need to be in writing, and the special rules relating to suretyship do not apply. The  legal effect of a guarantee depends on its terms and surrounding circumstances.   For purposes of the National Credit Act 35 of 2005 ("the NCA"), i...

Shaw & Another v Mackintosh & Another 2019 (1) SA 398 (SCA) The National Credit Act 34 of 2005 ("NCA") applies to all credit agreements within the Republic of South Africa involving individuals. A few exceptions are transactions which are not concluded at arm’s length (namely, loans between family members, partners and friends on an informal basis) as well as agreements between a stokvel, and a member of that stokvel. The NCA also does not apply to credit agreements concluded by companies with an asset value or annual turnover of less than R 1000 000.00. However, the NCA will apply if such a company enters into a large agreement (i.e. a loan agreement for more than R250 000.00). There are more exceptions listed in section 4 of the NCA, however, the exceptions mentioned above will suffice for purposes of  creating context to this discussion. In the matter of Shaw v Mackintosh the Supreme Court of Appeal   makes it clear that  if the  NCA  does ...