Guarantee Agreement South Africa

Linked to pay twice or what – Are minority union members obliged to pay a boutique agency contract fee in addition to the subscription fee? First, it is important for parties to a financing transaction such as this to ensure that all the operational and legal requirements necessary to conclude the transaction are met, not only with respect to procedural authorizations, but also with respect to the power to assume declared rights and/or obligations. This will eliminate any acts of ultra-vires and the legal and financial consequences that could result. More importantly, when a state institution is involved, the constitutional invalidness of the loan contract adds a different and riskier dimension to the parties` powers of action. In conclusion, I would like to say that the guarantee contract has no legal scope defined in South African law. If a guarantee is subject to a breach of contract or a delay by the principal debtor, such a guarantee is incidental and is therefore considered a guarantee. So it`s not a real guarantee. However, if a guarantee takes the form of an absolute and unconditional promise, it cannot be guaranteed and is in principle. Where a guarantee is established to create a primary obligation, the surety does not have the trap of an available defence guarantee, the main defence being that of the excursion (i.e., the creditor should first attempt to obtain the principal debtor`s benefit; the surety is only liable to the extent that the creditor does not). In view of the fact that, under common law, a guarantee is granted to the defence assets available to the principal debtor, with the exception of persons available to the principal debtor, the result would be that a guarantee would be entitled to the protection afforded by the law to the consumer. These include the lender`s defence of reckless loans or the illegality of the underlying credit contract. In addition, before the creditor can keep the guarantee on its contractual obligations, the creditor should follow the procedure provided by the law on the performance of a credit contract, including mandatory notices of the law.

The creditor would have to follow the collection procedures provided by law and, if the guarantee were over-indebted, it would have the right to invoke the provisions of section 79 of the Act. All of this makes it a surety contract under the law, a lower security than in the common law. It is also more difficult for credit providers. Guarantees must expressly state that the guarantee creates a primary obligation and not a guarantee and that the obligations of the bond are not affected by the applicability and legality of the reasoned commitments. A guarantee under South African law creates an ancillary obligation and the absence of the underlying commitment will also affect the guarantee. For example, when a business is put on a rescue note, the corporate rescue practitioner has the right to terminate certain contracts in order to improve the company`s financial situation. If the main contract is terminated, the guarantee is also terminated, as it is only incidental to the main obligations. The wording of the guarantee may constitute an unconditional obligation to bind the guarantor as co-debtor.

If this is the text, the guarantee is not a guarantee. Therefore, it does not require the creditor to first attempt to obtain a benefit from the debtor: the creditor may first demand payment or benefit from the surety.