UNDERSTANDING SURETYSHIPS IN SOUTH AFRICAN LAW: WHAT YOU SIGN CAN CHANGE YOUR LIFE!

JOHN COMNINOS
Jul 31
2 min read

Have you ever signed a document to “help a friend out” without reading the fine print? That signature might just come back to haunt you — in the form of a suretyship.

Whether you’re a business owner, a property investor, or a parent helping your child secure their first lease, suretyship agreements are legal landmines if not fully understood. In South African law, the consequences of signing a suretyship can be devastating — and often permanent.

So, what is a suretyship, and how do you protect yourself?

What Is a Suretyship?

A suretyship is a legal agreement in which a third party (the surety) agrees to be responsible for the debt or obligations of another party (the principal debtor) if they default. It’s a form of security for the creditor — and it’s legally binding.

This isn’t just “helping out.”You are effectively guaranteeing someone else’s debt, often with your personal assets.

Under South African law, a suretyship must:

Be in writing (as per the General Law Amendment Act 50 of 1956),
Clearly state the parties involved,
Be signed by the surety (you),
And not be entered into under duress or fraud.

Common Myths and Costly Mistakes

Myth 1: “If they default, I can always get out of it.”Wrong. Unless the agreement has a time limit or clear termination clause, a suretyship can last indefinitely — even if your relationship with the debtor ends.

Myth 2: “If the company is liquidated, I’m off the hook.”Wrong again. The creditor can skip over the insolvent company and come straight for you.

Myth 3: “I was just a co-signer, not the main debtor.” Nope. Most South African suretyship agreements contain a "principal debtor clause", which makes you jointly and severally liable — as if you were the actual debtor.

The Hidden Dangers: What’s at Stake?

Your personal home or vehicle could be attached.
Your credit record may be affected.
You may be sued even if you had no knowledge of the default.
You might have to pay legal fees and collection costs.

And worst of all, you might not even realise that you’re liable until the sheriff is at your door.

How to Protect Yourself (or Your Business)

Before signing anything:

Read the fine print — especially clauses about the scope, duration, and waiver of defenses.
Insist on legal advice before agreeing to stand as surety.
Avoid unlimited suretyships — negotiate limits in amount and duration.
Request a termination clause.
Don’t mix friendship with finance unless you’re willing to take the full financial hit.

Call to Action: Don't Sign Blind

At Comninos Incorporated, we’ve helped many South Africans navigate the legal traps hidden in suretyship agreements. Whether you’re being pressured to sign one, or you're already in hot water, we can help.

Before you sign anything, ask yourself: Can you afford the cost of someone else’s mistake? If the answer is “no,” then don’t sign — without contacting us first.

Email: john@comninoslaw.co.za

Comninos Incorporated.