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August 06, 2015

Suretyship agreement – Defence of mistake

In Voltex (Proprietary) Limited v Super Team Electrical (Proprietary) Limited t/a Electric World and others [2015] JOL 33416 (KZD), the court had to determine if the Respondent’s defence was valid.
In a written credit application to the applicant, the Respondent bound himself as surety and co-principal debtor in solidum with Super Team. Although admitting having signed the credit agreement, the surety argued that he was not bound by a suretyship document, because he signed it by mistake and without any intention to incur contractual liability. He further averred that he did not read the document when he signed it.

The court found that the respondent’s mistake in this case was a unilateral one. Having regard to the nature of the agreement signed by the respondent and the clear wording thereof, there could be no doubt that the respondent knew what he was signing. The document was clearly recognisable as a suretyship undertaking. By affixing his signature to the document, the respondent had effectively assented to the terms contained therein unless he could show that he was fraudulently deceived by the applicant into signing it. No such fraud was established. The Court held that the legal maxim “caveat subscriptor” found application herein and the respondent was bound to the terms contained in the agreement.

On that basis, the court described the defences raised by the Respondent as fictitious, far-fetched and untenable, and granted judgment in the applicant’s favour.



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