A surety can be described as one who has
contracted to be responsible for the debt of a debtor in circumstances where the debtor is still liable for the debt.
The purpose of
a suretyship is to secure the performance of an obligation and is frequently used
in commerce as part of the risk management program of a business.
2012 Supreme Court of Appeal judgment has again emphasised the importance of
having your t’s crossed and i’s dotted when it comes to suretyships signed in
favour of your business. The surety in
this case said that he was married in community of property and that his wife
had refused her consent to his signing the deed of suretyship and that the
suretyship was therefore invalid.
Matrimonial Property Act states that both spouses have the same powers with
regard to contracting of debts of the joint estate. The Act, however, does impose a very
important prohibition on the one spouse binding him or herself as surety, by
stating that a spouse shall not without the written consent of the other spouse
bind himself as surety. This prohibition
does not, however, apply where the suretyship is executed by a spouse in the
ordinary course of his profession, trade or business.
AVOIDING THE “NO SPOUSAL CONSENT”
Conduct a deed search on the
surety to establish whether he or she is married in community of property.
If he or she is, demand
unequivocally that the spouse of the surety also signs the suretyship (see
proposed wording in adjacent text box).
Implementing these two simple steps as part of your credit risk
management program will save you money and headaches down the road.FREE SAMPLE
OF A “SPOUSAL CONSENT” CLAUSE
terms of the Matrimonial Property Act 88 of 1984
I, (Spouse 1) married in community of property to (Surety) consent in the presence of the undersigned
witnesses to (Surety) binding himself/herself as
surety to (Creditor) for (Debtor).