Our common law in this regard has developed to a sophisticated degree. As part of this development, the law recognises certain safeguards or defences for debtors and/or sureties. Loan and/or suretyship documents inevitably record that the debtor and/or sureties surety waives various of these defences (often described by their Latin names) and, equally inevitably, also solemnly records that the surety “knows and understands the meaning and full force and effect of…” the defences he is waiving.
The renunciation of a legal exception will not preclude such exception from being raised as a defence to anyone in the event that a dispute arises or legal proceedings are instituted. However, should an exception be raised as a defence by any party after waiving such exception, then the onus of proving that such exception and the relevant facts relating thereto, will lie with that party.
Although the law relating to loans and suretyships is fairly complex, the following is intended to serve as a quick guide to the defences (sometimes also called exceptions or benefits) that sureties are required to waive:
* The exceptio non numeratae pecuniae
This is the defence that moneys claimed were in fact never advanced to, or received by or on behalf of the debtor.
For example, this is an exception which may be taken by a debtor on the grounds that, although he has signed an acknowledgement of debt, the amount was never paid over to him. The renunciation of this exception shifts the burden of proof to the defendant (i.e. the debtor) who will have to prove that he did not receive the money.
* Exceptio errore calculi
This is the defence that the amount claimed has been incorrectly calculated
* The exceptio non causa debiti
The purpose of renouncing exception is to place the onus of proving the absence of a cause of debt on the debtor.
The purpose of getting a debtor to renounce this benefit is likewise to shift the burden of proof onto the debtor. In the context of a suretyship, it would mean that the debtor/surety would have to prove that the principal debt for which he undertook liability does not exist.
Revision of accounts
A defence which can be taken by a debtor relating to an amendment of an account. This is relevant where the obligation relates to the settlement of account.
de duobus vel pluribus reis debendi
When this benefit is renounced, it has the effect of making two or more sureties jointly and severally liable (that is, either of them can be sued for the whole debt).
A waiver of this benefit by a co-debtor or surety entitles the financial institution to recover the full debt from such co-debtor’s surety, without first requiring payment from the other debtor or the principal debtor.
Beneficium ordinis seu excussionis
A waiver of this benefit by a surety entitles the financial institution to claim payment from the surety without first exhausting the legal remedies against the principal debtor.
A waiver of this benefit by a co-surety entitles the financial institution to recover the full debt owed by the principal debtor against that surety
* All three of the above starred exceptions are considered to be unlawful provisions in a Credit Agreement and cannot be included in a credit agreement to which the National Credit Act applies in terms of Regulation GN 713 of 1 June 2006 at regulation 32. This concept becomes all the more complicated when one considers that not all credit agreements are regulated by the National Credit Act (for example morgage agreements where the consumer is a juristic party are excluded from the National Credit Act). Moreover these exceptions are also likely to fall foul of the Consumer Protection Bill when that becomes enacted.