Limited Suretyship – Cause of Debt

LIMITED SURETYSHIP

Cause of Debt

Summary A Limited Suretyship – cause of debt may be used where a debt is owed or may in the future be owed by someone, and additional security is required in the form of another person accepting personal liability for the debt. This suretyship limits the guarantor’s liability to amounts that the debtor owes in relation to a specific transaction or agreement. In other words, the surety will not not liable for all the debtor’s debts.

We also have Limited Suretyships for: amount & cause of debt; time & amount; time (expiry date); and amount.

Why do I need a Suretyship? The Limited Suretyship – cause of debt gives a supplier or creditor additional security. If the customer or debtor defaults, the creditor may use the suretyship to demand payment from the surety. If your business has customers or debtors that are likely to owe money, for example the provision of goods and services on credit, then a Suretyship may be used to reduce the risk of non-payment. Particularly if your customers or debtors are legal entities such as companies or trusts, where the directors, shareholders or trustees can be requested to personally guarantee the legal entity’s debt. But it can also be used by someone standing surety for their spouse, parent, child, friend or partner.

What does the Suretyship look like? This template suretyship can be printed onto two pages.

What do you need to do to use this Suretyship?

• Read the sample suretyship document to ensure that it suits your requirements. Make changes as required.
• Complete the relevant details, and get the surety or sureties to sign.

This is a limited payment guarantee. We also have an Unlimited Suretyship if you need the guarantors to sign an unlimited payment undertaking.

A specialist’s advice should be sought, especially if the underlying debt is subject to the National Credit Act 34 of 2005.

Also viewed: Acknowledgement of Debt

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