Suretyship Agreements


Surety a person or organisation that takes responsibility for another's performance of an undertaking to pay the debt in case the debtor policy defaults or is unable to make the payments.

The party that guarantees the debt is referred to as the surety, or as the guarantor.


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

It is essential for there to be a valid principal obligation between the creditor and debtor in order for the suretyship agreement to be valid. A suretyship agreement is an accessory agreement, which only exists in the presence of a valid underlying agreement. Therefore, if there is no principal obligation, then there is no suretyship agreement. 

The obligation of the debtors towards the creditor continues to exist notwithstanding the suretyship agreement.

In simple terms, a suretyship agreement helps provide security for payment being made to the creditor by the debtor. If the debtor defaults, the creditor can look to the surety instead, in terms of the suretyship agreement, to recover the monies owing.

It is a requirement that a suretyship agreement must be in writing and signed by the surety in order for it to be valid. 


A creditor who has enters into an agreement with another person or entity (debtor), where that debtor has to, or might in future, owe the creditor money, the creditor might like some security to ensure that they are able to recover the monies owing if the debtor defaults in payment.



A suretyship is a contract between the creditor, the principal debtor and the surety. In his personal capacity the surety undertakes to step into the shoes of the principal debtor and pay the creditor if the principal debtor can’t. The suretyship agreement exists, dependant on an underlying agreement. 

The surety and the principal debtor become jointly and severally liable to the creditor.


An independent guarantee exists independently of any underlying agreement by the principal debtor to the creditor.

The guarantor irrevocably and unconditionally guarantees, as a primary obligation, in favour of the creditor, the payment by the principal debtor of all amounts it owes to the creditor and undertakes to pay the creditor on written demand all sums which are now, or at any time or times in the future due by the principal debtor to the creditor.

The guarantee is a continuing covering security and remains in force until the principal debtor pays everything it owes to the creditor.



The primary obligation for which the suretyship agreement applies to must be agreed on and stated within the agreement to avoid any uncertainty.

The surety should undertake that they shall not be entitled to withdraw or cancel this suretyship unless and until all indebtedness, commitments and obligations have been fully discharged or extinguished. 


The surety should renounce all benefits arising from the legal exceptions and defences and agree and declare that the suretyship is to be in addition and without prejudice to any other suretyship/s and security/ies now or hereafter to be held by the creditor.

Claims and/or counterclaims of the principle debt 

The surety should acknowledge that all amounts due and payable by the principal debtor to the creditor shall be recoverable from and paid by the surety notwithstanding that the principal debtor may have any claim or counterclaim of whatsoever nature and howsoever arising against the creditor.

Release and Latitude

Without affecting the rights of the surety, the creditor may be entitled to release securities and other sureties of the surety.

Costs, Charges and Expenses

The surety is responsible for all costs, charges and expenses of whatsoever nature which may be incurred by the creditor in enforcing their rights in terms hereof including, but not limited to, legal costs, collection commission and tracing fees irrespective of whether or not any action has been instituted against the surety.

Application of Monies

All parties should agree that the creditor is irrevocably authorised to apply any monies received in terms of this suretyship in such manner as the creditor in its entire discretion may think fit.

Boilerplate clauses 

Just like any other agreement, the suretyship agreement should contain standard boilerplate clauses (also commonly referred to as standard or general clauses). These clauses are included in the agreement to ensure certainty and prevent ambiguity.

Boilerplate clauses to expect in a suretyship agreement:

  1. Severability 

  2. Notices and Domicillium 

  3. Variation