Co-Principal Debtor
Also known as: Surety and Co-Principal Debtor, Joint and Several Surety.
What is Co-Principal Debtor?
A co-principal debtor is a surety who has waived the benefits of excussion and division and is liable jointly and severally with the principal debtor for the full debt. Creditors may sue the co-principal debtor immediately on default without first proceeding against the principal debtor.
Drafted and reviewed by
Attorney & Founder, My-Contracts.co.za · Legal Practice Council of South Africa (LPC F17333)
Definition and context
"Co-principal debtor" is a term of art in South African suretyship law. A pure surety undertakes an accessory obligation to pay if the principal debtor does not; a surety who binds himself "as surety and co-principal debtor" additionally undertakes his own primary obligation and in doing so waives the common-law benefits of excussion (beneficium ordinis seu excussionis), division (beneficium divisionis) and cession of action (beneficium cedendarum actionum). The leading authority is Neon and Cold Cathode Illuminations v Ephron 1978 (1) SA 463 (A), confirmed in Absa Bank Ltd v Davidson 2000 (1) SA 1117 (SCA), holding that the co-principal debtor\'s obligation remains accessory in character (it extinguishes if the principal obligation is extinguished) but loses the procedural benefits that shield a pure surety.
Practical consequences are substantial. A creditor may proceed directly against the co-principal debtor on default without first demanding payment from the principal debtor or exhausting other securities. Where there are multiple co-principal debtors, the creditor may sue any one for the full debt, relegating them to claim contribution inter se. The waiver of cession of action is important where the creditor holds additional security: the co-principal debtor who pays loses the common-law right to demand cession of that security and must rely on contribution and subrogation principles instead. Suretyship agreements accordingly often preserve subrogation expressly.
Formal requirements are strict. Section 6 of the General Law Amendment Act 50 of 1956 requires the suretyship to be embodied in a written document signed by or on behalf of the surety, identifying the principal debtor, the creditor and the nature and amount of the principal debt. A suretyship that fails to identify the principal debt with reasonable certainty is void (Fourlamel (Pty) Ltd v Maddison 1977 (1) SA 333 (A)). The in duplum rule and NCA reckless-credit provisions apply pari passu to the co-principal debtor\'s liability.
Where this term lives in law
National Credit Act 34 of 2005
Sections: 8, 80, 81, 103(5)
Regulates consumer credit, credit providers, and the in duplum rule in South Africa.
Frequently asked questions
What is the difference between a surety and a co-principal debtor?
A pure surety has the common-law benefits of excussion, division and cession of action. A co-principal debtor waives these benefits and is liable jointly and severally with the principal debtor, so the creditor can sue directly without first pursuing the principal debtor.
Must a suretyship be in writing?
Yes. Section 6 of the General Law Amendment Act 50 of 1956 requires written and signed suretyship identifying the creditor, the principal debtor and the principal debt. Oral suretyship is void ab initio.
Can a co-principal debtor recover from the principal debtor?
Yes, through the right of contribution and, to a limited extent, subrogation. The co-principal debtor who pays the debt can recover the full amount from the principal debtor and a pro-rata share from any other co-sureties.
Does the NCA apply to suretyships?
Yes. Section 8(5) of the NCA deems a suretyship a credit agreement, so affordability, reckless-credit and disclosure provisions apply. The credit provider must conduct an affordability assessment on the surety at conclusion.
Does cancellation of the principal agreement release the co-principal debtor?
Yes, as a matter of accessoriness — extinguishing the principal debt extinguishes the surety's obligation. But novation, composition or variation may keep the co-principal debtor bound if the suretyship expressly permits it.
Contract templates using this term
3 templates reference Co-Principal Debtor.