Repackaging the General Prejudice Principle in Suretyship Agreements as a Breach of Contract under South African Law

Abstract

Historically, if a creditor through his conduct prejudiced or injured a surety in the latter's rights or interest, the surety was entitled to claim release from his obligations under the general prejudice principle. However, the principle was summarily rejected by the Supreme Court of Appeal in Bock v Dubororo Investments (Pty) Ltd 2004 2 SA 242 (SCA), and it may now be determined whether there exists another interpretation in order to ensure its survival. This article considers the historical application of the general prejudice principle in suretyship agreements under South African law since the principle’s original incorporation from the English law up until its outright rejection by the Supreme Court of Appeal in Bock. It then aims to reinterpret the principle in the light of ordinary contract law principles as being nothing more than a breach of contract by the creditor.