In legal practice, any individual who can contract can enter into a suretyship agreement. However, if the person acting as the surety lacks the necessary mental capacity to contract, the suretyship will be deemed invalid. In situations involving minors, a guardian may take on the surety obligations on behalf of their minor ward. It is important to note, however, that an emancipated minor generally cannot serve as a surety, as their capacity to contract is restricted to their affairs and does not extend to the responsibilities of others.

Mutual sureties 

Two individuals, known as mutual sureties, can each agree to be responsible for the other's debt. This arrangement is commonly found among businesspeople, even if they are not partners, and serves as a way to provide mutual assistance, especially in securing banking services like loans. Similarly, co-debtors can also act as sureties for one another.

Co-surety

It is common for two or more individuals to act as sureties for the same principal debtor and obligation. These individuals are known as co-sureties, regardless of whether their commitments are documented separately, made independently, at different times, or without their knowledge of one another. Each co-surety is jointly and severally liable for the entire debt of the principal debtor. 

Surety and portion of debts

Individuals who provide surety for only a specified portion of a debt are not considered co-sureties. Similarly, if a surety only covers a part of the debt while others secure the entire amount, that surety does not qualify as a co-surety. The distinction between co-sureties and ordinary sureties is essential. Co-sureties can share the liability among themselves unless there is a different agreement in place. If one co-surety pays off the debt, they have the right to seek contribution from the other co-sureties.

Co-principal and surety

An individual who acts as a surety may also take on the obligations of a co-principal debtor. This dual role can be clearly outlined in the suretyship agreement. However, if there is no explicit provision stating this, determining whether the individual serves as both a surety and a co-principal debtor requires an evaluation of the language in the document and the surrounding circumstances. 

Even if the individual signs a promissory note as the maker, this does not automatically confirm that they are a principal debtor. Additional evidence may be necessary to clarify the true nature of the relationship between the parties and their respective obligations. 

Fideiussor indemnitatis

A fideiussor indemnitatis, or indemnity surety, is a specialised form of suretyship. Under the terms of the contract with the creditor, the commitment is solely to compensate for any loss or deficiency the creditor suffers due to the principal debtor's failure to perform. This liability is thus limited to the shortfall incurred once the creditor has excused the debtor or once events occur that relieve the creditor from the debtor's non-performance unless the contract explicitly provides otherwise.

Conclusion

In conclusion, a surety is liable to indemnify the creditor immediately when the principal debtor's obligation becomes due and remains unfulfilled. This fundamental difference means that an indemnity surety retains the right to have the creditor first establish the extent of the loss by excusing the principal debtor before proceeding to claim payment, whereas a complete surety does not enjoy this preliminary right. 

Written by Riaan Basson, Candidate Attorney, SchoemanLaw Inc