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  The Anatomy of a Personal Surety/Guarantee...

So what is a Personal Surety, exactly?

This is heavy reading. And very distressing.

This personal surety/guarantee document is the most powerful tool in the bank's armoury.

Take your time working through this surety example. You never want to sign another one of these again.

This surety documents the kryptonite that destroys the futures of most small business owners.

The format of this surety translation:

Anything written like this is the wording of a normal surety...

And anything written like this is an English "translation" of the legal code..


I/We, the undersigned YOUR NAME HERE hereby bind myself/ourselves jointly and severally to – BANK, LANDLORD NAME HERE ("the creditor"), and their successors-in- title, assurety/ies for and co-principal debtor/s in solidum with– YOUR BUSINESS NAME HERE ("the debtor") for the due and punctual payment and performance by the debtor of all debts and obligations of whatsoever nature and howsoever arising which the debtor may now or in the future owe to the creditor from any cause of indebtedness howsoever arising, including, without limiting the generality thereof any claims which the creditor may have acquired or may in future acquire against the debtor from any company, person, partnership, association or other legal persona whomsoever or whatsoever by way of cession or otherwise, legal costs on the attorney and own client scale, collection commission, interest and any other charges of whatever nature ("the obligations"). 

In English, this means that you will pay any money owing to the bank (creditor) for any reason at any time in the future. It does not matter if you are no longer involved with the firm – even if you don’t know that the amount is owing in the first place. Even if it’s 10 years later. There’s actually a lot more in here – but we need to keep it brief. I detail a few stories elsewhere in this course to show how extreme this surety commitment can be.

I/we hereby expressly renounce the defence of prescription and the benefits of the legal exceptions of "order", "excussion", "cession of action", "no value received", "non causa debiti" and all or any exceptions which could or might be pleaded to any claim by the creditor against me/us or any one of us, with the meaning force and effect of all of which exception I/we declare ourselves to be fully acquainted. 

In English this means that you have given away any defence that common law and common sense would give you, and you have confirmed that you completely understand what the Latin words mean and what you have given away.

The rights of the creditor under this suretyship shall not be affected or diminished if the creditor at any time obtains additional suretyships, guarantees, securities or indemnities in connection with the obligations. Notwithstanding that this suretyship may for any reason whatsoever be held to be or become not binding in whole or in part upon any one or more of us and notwithstanding that it may not be signed by all of us, it shall be and remain of full force and effect and binding upon the others of us. 

In English, this means that even if the creditor (the bank etc) gets another five people to sign this surety, they can choose who they want to attack, and for how much. In other words, they can chase just you for the full amount.

I/We shall be bound by all admissions or acknowledgements of indebtedness made or given by the debtor to the creditor from time to time.

The English version says that if your company signs anything or makes any commitment to the bank – even if you no longer own the company – you agree to pay.

Should the debtor fail to discharge any of the obligations on due date, the creditor shall be entitled notwithstanding any contrary arrangement with the debtor, to demand from me/us immediate performance of all the obligations then owing by the debtor to the creditor, whether the due date for the performance of the obligations shall have arrived or not. 

In English, if your company reaches an agreement with the bank to pay over time – the bank can demand that you personally pay everything now instead – even if the amounts aren’t yet due.

This suretyship is a continuing suretyship and shall remain of full force and effect notwithstanding any fluctuation in, or temporary extinction of the debtor's indebtedness too the creditor. It may not be withdrawn, revoked or cancelled by me/us without the creditor's prior written consent. Any consensual cancellation or withdrawal of this suretyship by me/us and the creditor shall only be valid and effective if reduced to writing and signed by both parties thereto. 

Even if the bill that you think you signed for is paid you will still be responsible for any future bill. And the ONLY way to get this canceled is to get it in writing and signed. Doesn’t that mean that all those old sureties that ‘have been filed in our obsolete section’ are still valid? If you have ever tried to get a surety back then you will know how dangerous this clause is.

The creditor shall be entitled, whether before or after the due date for payment or performance of the obligations, without reference or notification to me/us, without affecting its rights hereunder and without releasing any surety hereunder, to release other sureties and securities; to grant the debtor extensions of time for payment and other indulgences; to compound or to make any other arrangements with the debtor for the discharge of the debtor's indebtedness; to accept any dividend in a liquidation or judicial arrangement on account and in reduction of the debtor's indebtedness; to alter or vary any present or future agreement between the debtor and the creditor. 

The bank and the company can do what they want, when they want, without telling you – but you must still pay for any arrangements they make.

A certificate under the hand of any director or manager of the creditor (whose appointment need not be proved) as to the existence and the amount of the debtor's indebtedness and the surety's indebtedness to the creditor at any time, as to the fact that such amount is due and payable, the amount of interest accrued thereon and as to any other fact, matter or thing relating to the debtor's indebtedness to the creditor and the surety's indebtedness to the creditor, shall be sufficient and satisfactory proof of the contents and the correctness thereof for the purpose of provisional sentence, summary judgment or any other proceedings of whatsoever nature against the debtor and/or the surety in any competent court and shall be valid as a liquid document for such purpose. 

This says that the bank never makes any mistakes, so any document signed by them that says you owe them money means that indeed you owe them money – and they can use that document to get a judgement against you.

In terms of section 45 of the Magistrate's Court Act, I/we hereby consent to the jurisdiction of the Magistrate's Court having jurisdiction in terms of section 28 of the said Act in respect of any action to be instituted on this suretyship. This consent is without prejudice to the creditors rights to proceed in any other court having jurisdiction. 

Since it’s much cheaper and much easier for the bank to attack you in a lower court, you have just said they can do it that way.

I/We hereby choose domicilium citandi et executandi at the address/es set out below at which address/es all notices and communications may be addressed to me/us and all notices addressed to me/us at the said address/es and despatched by prepaid registered post shall be deemed to have reached me/us three days after the date of posting. 

You have asked them to summons you at this address (usually where you live right now) and the only way to get them to find you elsewhere is to send them a registered letter. Otherwise they can get a judgement against you without you even knowing about it.

As security for the fulfillment of all obligations hereby undertaken I/we do hereby pledge, cede, assign, transfer and make over unto and in favour of the creditor all right, title and interest in and to any amounts and claims from whatsoever source arising and which are now, or which may hereafter become, owing to me/us from any source and from any cause of indebtedness howsoever arising. In the event of any prior ranking cession existing at the date hereof the aforegoing cession in favour of the creditor shall operate as a cession to the creditor of any right of action which I/we may now or at any future time have against the prior cessionary. 

Since you owe them so much money you have just transferred all your future rights to them, including the right to your salary.

I/we hereby indemnify and hold the creditor harmless against any damage or loss of whatever nature which the creditor may sustain arising out of or in connection with the enforcement, cancellation or invalidity for any reason whatsoever of any agreement between the creditor and the debtor. I/we warrant and undertake that the debtor will perform all of its obligations of whatever nature which are at any time owed by it to the creditor. 

If the bank incurs any costs at all – you’ve just offered to pay them.
Should the creditor cede its claim against the debtor to any third party, then this suretyship shall be deemed to have been given by me/us to such cessionaries, who shall be entitled to exercise all rights in terms of this suretyship as if such cessionaries were the creditor hereunder.

If the wonderful person that you owe money to sells out to the Mafia – the Mafia get all the good things you’ve given away in this document.

Any reference herein to the creditor, shall include a reference to all the companies included in the definition of creditor and to each of them separately and individually, jointly and severally, as if a separate suretyship had been entered into by me/us in favour of each of those companies for the obligations. Consequently, any company referred to in the definition of creditor in 1. above, may enforce this suretyship, any payment in full or in part to any one of them will extinguish to the extent of such payment that indebtedness, to the others of them, as the case may be. 

The debtor shall be liable for and undertakes to pay the stamp duty applicable to this deed.

You even get to pay for the privilege of signing your entire life away.

Signed at on this the day of 20... 

I/We acknowledge and confirm that this Suretyship was fully completed at the time of signing it.

Now that you know what a surety really is, you know why I have not signed one since 1989.

This course details how to:

how to fund your business without signing them,
  • how to cancel them,
  • and how to nullify the effect of those you cannot retrieve.**

    Want to know more?

    This page is part of a complete course on Business Owner Success Strategies to help you restructure your business:

    • to avoid signing sureties,
    • to eliminate all of the risks,
    • to put you in a position where you and your family prosper,
    • no matter what happens to your business, even closure.

    This page is open to all because I think this should be public knowledge.

    If you want the rest of the strategies, and you haven't yet enrolled in this course, please go here.

    If you have any questions, please email me here.