Morgan and Another v Brittan Boustred Ltd. (410/90) [1992] ZASCA 39; 1992 (2) SA 775 (AD); [1992] 2 All SA 69 (A) (26 March 1992)

Morgan and Another v Brittan Boustred Ltd. (410/90) [1992] ZASCA 39; 1992 (2) SA 775 (AD); [1992] 2 All SA 69 (A) (26 March 1992)

The Supreme Court of Appeal held that clause 4 of the deeds of suretyship, which prohibits withdrawal, revocation, or cancellation without the creditor's prior written consent, is intended to restrict only unilateral cancellation by the surety. It does not apply to consensual (bilateral) cancellation agreed upon by both creditor and surety. Section 6 of the General Law Amendment Act does not preclude oral cancellation of a contract of suretyship, provided the cancellation does not amount to a variation of the contract's terms. The plea, as drafted, was at least capable of raising a defence not hit by clause 4, and the exception to paragraph 4 should have been dismissed. The court set...

Citation
[1992] ZASCA 39
Parties
Appellant: Anthony Clarence Morgan; Appellant: Norman Frank Morgan; Respondent: Brittan Boustred Limited
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
26 March 1992
Case Number
410/90
Procedural Posture
Civil Appeal / Appeal Against Upholding of Exception to Certain Paragraphs of Plea
Outcome
Appeal upheld in respect of the exception to paragraph 4 of the plea; order of the court a quo set aside and substituted.
Judges
Botha, Nestadt, Nicholas, Van Coller, Harms
Legal Topics
Suretyship, Oral Cancellation, Contractual Variation, Exception Procedure
Commercial and Corporate Civil Procedure Suretyship Oral Cancellation Contractual Variation Exception Procedure

Case Brief

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Parties

Anthony Clarence Morgan

Appellant

Norman Frank Morgan

Appellant

Brittan Boustred Limited

Respondent

Procedural Posture

Civil Appeal / Appeal Against Upholding of Exception to Certain Paragraphs of Plea

Legal Issues

  1. 1 Does clause 4 of the deeds of suretyship require the creditor's written consent for a bilateral (consensual) cancellation of the suretyship?
  2. 2 Does section 6 of the General Law Amendment Act, 50 of 1956, preclude oral cancellation of a contract of suretyship where the contract contains a 'no cancellation unless in writing' clause?
  3. 3 Was the exception to paragraph 4 of the plea properly upheld by the court a quo?

Ratio Decidendi

The Supreme Court of Appeal held that clause 4 of the deeds of suretyship, which prohibits withdrawal, revocation, or cancellation without the creditor's prior written consent, is intended to restrict only unilateral cancellation by the surety. It does not apply to consensual (bilateral) cancellation agreed upon by both creditor and surety. Section 6 of the General Law Amendment Act does not preclude oral cancellation of a contract of suretyship, provided the cancellation does not amount to a variation of the contract's terms. The plea, as drafted, was at least capable of raising a defence not hit by clause 4, and the exception to paragraph 4 should have been dismissed. The court set...

Court Disposition

Appeal upheld in respect of the exception to paragraph 4 of the plea; order of the court a quo set aside and substituted.

Orders

  • The appeal succeeds with costs, including costs of the application to the court a quo for leave to appeal and the costs of the petition for leave to appeal.
  • The order of the court a quo is set aside and substituted as follows: (1) The exception to paragraph 4 of the plea is dismissed. (2) The exception to paragraphs 10(b)(i) and (ii) and 10(e)(i) and (ii) is upheld; these paragraphs are struck out. (3) The defendants are ordered to pay the plaintiff's costs as between...