THOUGHT OF THE WEEK Suretyship and a spouse’s consent
Strydom executes an unlimited suretyship in favour of Engen for the debts incurred by Soutpansberg Petroleum, a company of which he was a director. He was married in community of property at the time, but his wife is not involved in the transaction as it relates to her husband’s ordinary work and business. However, when Soutpansberg is subsequently liquidated, Strydom denies liability for Engen’s claim, arguing that the suretyship is invalid due to the absence of his wife’s consent.
The Matrimonial Property Act states that a spouse who is married in community of property must have the written consent of the other spouse to bind himself/herself as surety. The prohibition does not apply where the spouse who signs the suretyship did so in the ordinary course of that spouse’s profession, trade or business.
In the above matter, finally decided in the Supreme Court of Appeal, the Court noted that it was a factual enquiry to examine whether an action was performed in the ordinary course of one’s profession, trade or business. Where the business was carried on through a company, the factual question was whether Strydom’s involvement in the company business was his business, and whether the execution of the suretyship was in the ordinary course of his business tasks (and not that of the company). As it was shown in Court that Strydom worked at the core of Soutpansberg’s business and that his activities there constituted his business, the exception applied and the suretyship was not invalidated by the absence of his wife’s consent.
Take advice when signing a suretyship to make sure what your and your spouse’s liabilities are. Contact KAPLAN BLUMBERG for assistance.