1. Contingent Liability Understanding the implications of signing surety

2. Sanlam Business Market This presentation gives you insight into the business owner’s decision to sign surety and the implications thereof especially if no surety cover is in place. A contingent liability podcast as well as an intermediary and client article that summarises the essence of this presentation is available in English and Afrikaans and can be downloaded from the Business Insurance Briefcase. This presentation gives you insight into the business owner’s decision to sign surety and the implications thereof especially if no surety cover is in place. A contingent liability podcast as well as an intermediary and client article that summarises the essence of this presentation is available in English and Afrikaans and can be downloaded from the Business Insurance Briefcase. Contingent liability Understanding the client need and the implications of their actions Financial Solutions for Business Owners

3. The 1-2-3 of Business Financial Solutions for Business Owners

4. Structuring your business Financial Solutions for Business Owners

5.  Overdraft facility  Lease premises and equipment  Bond premises  Long term loans  Financing of vehicles / machinery / equipment Getting the business going Financial Solutions for Business Owners

6. Please sign surety! Financial Solutions for Business Owners

7. So what have you actually done? Renounce the benefit of excussion Allows you to compel the bank or the credit provider to take legal steps against the borrower first and recover all it can from the borrower before pursuing you. Renounced the benefit of division Suretyship is shared with more than one person allowing you as co- surety to demand that the debt is divided between all sureties and that you be held liable only for your share of the debt You are now a co-principle debtor The same level as your business Broken the corporate veil You are now exposed11 22 33 44 Financial Solutions for Business Owners

8. The other intricacies of signing surety Bank Business Owner The Surety Signing Surety Financial Solutions for Business Owners

9. The Prinsloo Case GHPM Boerdery 100 BPK vs Standard Bank North Gauteng High Court Financial Solutions for Business Owners

10. Induced by fraud or misrepresentation Slip Knot Investments v Du Toit 2011 Financial Solutions for Business Owners

11. Famous last words Financial Solutions for Business Owners

12. I did not know I signed surety Langeveldt v Union Finance Holdings The caveat subscriptor principle – “general contract law principles dictate that it is presumed that anyone who signs a document has the intention of entering into the agreement contained within that document” Financial Solutions for Business Owners

13. Is your business partner a stranger? Financial Solutions for Business Owners

14. The Ombudsman for Banking Services Personal Finance: Saturday, 5 May 2012  “His office sees the devastating consequences of suretyships”  “Universal (unlimited) suretyship agreements are often signed by a consumer as a matter of course”  “Entitles the bank to hold him/her liable for any debts of the person for whom they stand surety”  “Banks have not accepted our recommendation that the use of universal (unlimited) surety contracts be scrapped from the Code of banking Practice” Financial Solutions for Business Owners

15. What are the implications if the surety is not covered? Financial Solutions for Business Owners

16. Contingent Liability Article - Danger of signing surety without surety Financial Solutions for Business Owners

17. Contingent Liability Podcast: www.123ob.co.za/downloads Financial Solutions for Business Owners

18.  Avoid signing surety if all possible  Do not sign surety without surety  The implications are severe if the surety is called up  There is no escaping the surety contract  Know your business partner  Review the surety position of your client on a regular basis In summary Financial Solutions for Business Owners

19. The 1-2-3 of Business Financial Solutions for Business Owners

20. thank you

21. questions