A suretyship agreement is defined as an agreement in terms of which a third party, namely the surety, undertakes liability towards a creditor for the proper performance of a portion of or the entire obligation of a debtor.

A valid principal obligation between the creditor and debtor is essential for the validity of a suretyship agreement. This is known as an accessory obligation. Therefore, if there is no principal obligation, then there is no suretyship agreement. It should be noted that the debtor’s obligation towards the creditor continues to exist notwithstanding the suretyship agreement.

It should be noted that the suretyship’s liability can never exceed that of the debtor.

Guest on the line: Jared Poole - Attorney at Schoeman Law Inc