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									                                                                    T h e           F i n m a r              F i n a n c i a l

                                        Winter Issue                                                                                                 3rd Quarter 2010

                                        Richie Riches
                                        What are you teaching your kids about money? Often the advice parents give their children goes something
                                        like this: "Money doesn't grow on trees", or "Do you think I am made of money"? Although that parental
                                        wisdom has stood the test of time, it takes a bit more effort to teach a child sound financial management.

                                        Children are the most potent                         FAMILY FINANCE
                                                                                                                              put, you give your child a mone-
                                        receivers in the world - they are                                                     tary gift just for being your child.
                                        also notorious mimics. A child can        unfortunately, omitting this subject        The advantages of this system are
                                        read the unconscious signals in           can have an effect on the financial         that it is regular and unchanging.
                                        how we react to certain events            lessons they pick up and the atti-          You will not be raising or lowering
                                        and at once surmise and integrate         tudes they adopt. In general, par-          the amount of the allowance be-
                                        our attitude into their personali-        ents tend to avoid speaking to their        cause of your child's behaviour.
                                        ties. If we show a negative attitude      children about finances because it is       However, the disadvantages are
Francois Marais                         toward things of a financial nature,      an "adult" subject. Finance is seen         numerous. Your child will not get
Hons BComm, MBA                         chances are our children will too.        as something that a child can worry         a sense of achievement from the
                                        So how do we know when we are             about when childhood gives way to           allowance, nor will he or she truly
                                        sending the wrong financial mes-          adulthood and, as a result, parents         appreciate it. Additionally, it is
                                        sages to our kids and what should         neglect to address these topics             harder to instill a sense of fiscal
                         P O Box 401    we do about it?                                                                       responsibility when your child
                                                                                  with their children at an early
post                      Paarl, 7620                                             age. Implicit in this silence, how-         receives the money without show-
                                        What You Don't Know …
                                                                                  ever, are a number of negative              ing any initiative or desire.
                                        For many people, it may take              signals - if you do not discuss fi-         The Reward System
         discipline not to let out a groan         nance with your child, it may sug-
                                        when the bills come, a sigh when          gest to him or her that money is            The reward system is the most
                                        it is time to balance the books and       either unimportant or something             common system parents choose.
                                        a curse when a financial analyst          to fear.                                    In this system, parents set chores
phone                   021 871 1666    appears on the television screen.                                                     for their children to perform on a
                                        However, if your reaction to              For many children, this silence             weekly or monthly basis and then
                                        financial topics is typically negative    continues at their schools, with            pay a set amount for the successful
                                        and your strategy one of avoid-           only the most cursory glances at            completion of the chores. Chores
mobile                  083 654 1987
                                        ance, these will send a message to        accounting and vital life skills like       typically include tasks like washing
                                        your child that finances are an           budgeting. The undeniable truth is          the dishes and making the beds.
                                        annoyance best to be avoided.             that your children are going to             The advantages of this system are
fax                     021 872 4528                                              learn about finances from you. But          that there are consequences for
                                        Social scientists have discovered         to do this effectively, you need to         not doing the assigned chores and
                                        that the vast majority of children        develop a plan and some tech-
☺                   Yolanda Huijsamer   are destined for a financial future
                                                                                                                              a reward for doing them. In other
assist                                                                            niques that will help make the              words, this system provides a mix
          that differs little from that of their    lessons count. A good first step is         of positive reinforcement and
                                        parents. In many cases, the middle        granting your children an allow-            punishment. The disadvantages are
                                        class raise the next generation of        ance.
                                                                                                    somewhat difficult to see when
web                                     middle class people, the poor
                                                                                  Starting an Allowance                       your child is young, but the reward
                                        raise the poor and the wealthy
                                                                                                                              system is also guilty of reducing
                                        raise the wealthy. Very few chil-         It is hard to know when your child          your expectations for your child to
                                        dren move up the ladder from              is ready for an allowance. If you           a monetary figure. Your child
                                        their parents, while sliding down         start before they walk, your chil-          should clean his or her room and
                                        is as simple as swiping a credit          dren won't understand the signifi-          help with the dishes regardless of
                                        card.                                     cance of the money they receive.            any allowance. If you use the re-
                                        If there is going to be a change          Although it is not a hard and fast          ward system, you will encourage
                                        between your level of wealth and          rule, an appropriate starting point         your children's desire for money at
                                        that of your children, the odds are       is when your child's verbal compre-         the cost of their sense of responsi-
                                        that they will do worse financially,      hension is high enough for you to           bility.
                                        rather than better. They may earn         explain how the allowance will
                                                                                  work. When your child reaches               The Income System
                                        more than you do, but they will
                                        also spend more and save less. In         this level, there are three types of        The third system, the income
                                        recent years, the practices of            allowance to choose from: the gift          system, works much like real life.
                                        saving to buy and general frugality       system, the reward system and the           When there is a job to do that is
Inside this issue:                      have been sabotaged by quick              income system.                              not expected of your child - for
                                        credit, payment plans and a "why          The Gift System                             example, washing the car or weed-
Richie Riches                       1   wait?" shopping attitude.                                                             ing the garden - you can pay him
                                                                                  The gift system is a regular pay-           or her to do it. Basically, you want
                                        Deadly Silence                            ment to your child that is not de-
Banking on the future               2                                                                                         to establish an allowance that is
                                        Many parents avoid discussing             pendent on any chores that your             paid to your child for work out-
Making sure                         3   money with their children but,            child does or does not do. Simply           side of regular responsibilities. This

                                                                     Published by newsprintz media   084 471 0782
                                                                                                                                                                 Page 2

                                          The Finmar Financial Informer

                                          (Continued from page 1)                   it. One factor that limits how much         If you share your experiences with
                                          allowance will be variable and irregu-    your child can learn is the amount of       your child, he or she will be able to
                                          lar, but it will do far more for your     knowledge you are able to give them.        learn from your mistakes. Further-
                                          child's financial future than the other   An allowance is a great way to get          more, all of your research might even
                                          two.                                      the ball rolling, but as a parent,          pay off for you in the way of a better
                                                                                    you should also share your own real-        financial plan for yourself,
                                          In practice, you will have to agree on
                                                                                    life lessons in budgeting, frugality and    which could provide a great lesson
                                          how much a particular job is worth.
                                                                                    the importance of emergency funds.          for your children in itself.
                                          Write down all the jobs and the
                                          agreed upon payment for each one          To give your child the best advan-          The buck stops here
                                          on a large sheet of paper. Allow your     tage, you will need a working knowl-
                                                                                                                                For parents who are serious about
                                          child to tick them off as they are        edge about investing. Developing
                                                                                                                                instilling their children with some
                                          completed. Then, you can use this         this can be as simple as going to the
                                                                                                                                financial knowledge, there is more to
                                          work schedule to add up your child's      public library or searching the inter-
                                                                                                                                an allowance than just the transfer of
                                          allowance together. If your child does    net. There are books on portfolios
                                                                                                                                a trivial amount of cash. The system
                                          not keep up with regular responsibili-    and shares, and the internet is great
                                                                                                                                you choose has an impact on both
Rich Dad, Rich Mom, Rich Kids             ties, he or she will have less time to    for links and information. Many are
                                                                                                                                your child's financial outlook and his
                                          do paying jobs. You can also withhold     written in plain language and include
   The press often refers to well                                                                                               or her character. Pairing this system
  known billionaires like Howard
                                          the work schedule if your child has       easy-to-follow examples.
                                                                                                                                up with discussions about money and
   Hughes and Bill Gates as “self         not completed his or her regu-
                                                                                    You do not need to master concepts          finance and your own financial ex-
made”. The truth is that like many        lar duties.
                                                                                    like futures trading, but you will need     periences is also invaluable. If you
other so-called “self made” people
both of them came from extremely          Teach Yourself First                      to explain endowments, unit trusts          want to pave the way for success in
          wealthy families!                                                         and compound interest. The best             your children's financial future, you
                                          The deciding factor in whether or
                                                                                    way to educate your child is to edu-        can't just hope for the best. Instead,
                                          not a child will succeed financially is
                                                                                    cate yourself first. If you are lost in     provide them with the skills that will
                                          how much financial education they
                                                                                    the financial quagmire, you owe it to       make this success possible.
                                          receive and when they receive
                                                                                    your child to chart a course out.

                                          Banking on the future
                                          Robert Kiyosaki’s book, “Rich Dad, Poor Dad” was a huge success but it had its critics. They said that the book was too
                                          “airy fairy” and that it lacked practical instruction. His theory was that rich dads have a good attitude toward money and
                                          that they teach their kids good financial habits. Teaching them to invest and save is a great place to start!

                                          Sometimes we forget that we need                                                      but children will do better if they
                                                                                               FAMILY FINANCE
                                          to teach our children about planning                                                  learn it early.
                                          and budgeting. Creating a saving /
                                          investing and spending plan for your                                                  Explaining the Importance of Saving
                                          children will help steer them toward                                                  Children are masters of interrogative
                                          financial wisdom.                                                                     sentences so don't be surprised
       Why is it a Piggy?
                                          Splitting the Pot                                                                     when your child asks you why he or
 Dogs bury bones. Squirrels gather                                                    Banking is a great place to start         she should save money. The ideal
   nuts to last through the winter.       As your children start to receive                                                     reply has two parts. One, you have
                                                                                      with the basic lessons your kids
  Camels store food and water so          money - for example from an allow-                                                    to save money for the future. Two,
  they can travel many days across                                                     need for a successful financial
                                          ance - it is time to sit down and                                                     you save money so you can meet
 deserts. But do pigs save anything?                                                               future.
                                          show them how to make a saving and                                                    your spending goals. When your
  No! Pigs save nothing. They bury
                                          spending plan. It is essential that you     However, as they get a bit older,         child decides how much to save, you
    nothing. They store nothing.
                                          give your children the power to            their lessons should include simple        will then have to ask them how much
  So why do we save our coins in a        decide how much to save and how                   investment knowledge.
piggy bank? Because someone made
                                                                                                                                of that will be for the future and how
                                          much to spend. In doing so, you will        One of the best ways of teaching
 a mistake. During The Middle Ages,                                                                                             much for goals.
                                          also confer the responsibility and         them the invaluable lessons of risk
in about the fifteenth century, metal
 was expensive and seldom used for        excitement that comes with making             and return is with their own            If your child is very young, you
household wares. Instead, dishes and      adult decisions. You can make sug-          personalised endowment or unit            should encourage him or her to
  pots were made of an economical         gestions and prepare some example                    trust portfolio.                 choose one spending goal rather than
 clay called pygg. Whenever house-        plans, but the final choice should be                                                 many. A piece of sports equipment, a
wives could save an extra coin, they      left to your children.                                                                toy or some relatively inexpensive
dropped it into one of their clay jars.                                                                                         item will suffice. Your child will be
 They called this their pygg bank or      If the allowance payment will vary,       Spending
                                                                                                                                able to see how x% of his or her
           their piggy bank.              you should use percentages instead        You should not interfere in how your        money will go into savings and x% of
Over the next two hundred to three        of set amounts (save 25% of the           child uses his or her spending money.       that will slowly accumulate to buy a
 hundred years, people forgot that        allowance versus save R4). By giving      To a child, a few Rands often seems         chosen item in the near future. This
"pygg" referred to the earthenware        your child a choice of how much to        like a fortune. Don't interfere with        may encourage your child to increase
 material. In the nineteenth century      save, you bypass the question of
   when English potters received
                                                                                    your child's spending habits other          his or her saving rate.
                                          whether or not to save. This is, after    than to point out that once it's gone       As your child matures, he or she may
   requests for piggy banks, they
                                          all, a saving and spending plan, rather   it's gone - you won't provide more          want to save for a number of differ-
  produced banks shaped like pigs.
Of course, the pigs appealed to the       than the other way around. The goal       money if your child spends his or her       ent spending goals - a computer or a
    customers and delighted the           of this exercise is to teach your child   own too quickly. It's a difficult lesson,   car. That's fine - as long as it all
               children.                  a saving habit.
                                                                                                                      Page 3

3rd Quarter 2010

comes from the spending goal frac-         est. When you go together to the           through them together and explain
tion of the savings account. The           bank, let the bank consultant sell         the interest and any other numbers
amount going to the future should          your child on the account you have         that may appear upon it. You can
remain constant. You can call it his       decided on. Your child will feel much      even check the figures together to
or her car or varsity fund if you like,    more involved in the process. The          practice doing sums. On the same
but nurturing habitual saving in your      account should be in your child's          day as you regularly pay out your
child is more important than his or        name and all the mail should be ad-        child's allowance, go together to
her monetary progress. Once the            dressed to your child. Receiving bank      make the deposit at the bank. This
plan is complete, the next step is to      statements like mom and dad is a           will help to reinforce the habit of
go to the bank.                            source of excitement for most chil-        saving before spending. Saving should
                                           dren.                                      feel good so make sure that it’s a fun
Opening a Bank Account                                                                morning out with mom or dad!
You should visit your bank in advance      Get Organized                              Having a plan and tangible goals is as
to check what type of accounts they        On the same day as you open the            important to adults as it is to chil-
offer for children. You may be sur-        account, go shopping with your child       dren. In helping your children chart              Dumb and Dumber
prised by the incentives they offer for    and select a binder, a congratulatory      out their saving and spending plans,       Very few parents want their kids to
juvenile accounts. After settling on a     present. You will use this to organize     you may find ways to improve or              grow up dumb, greedy and rich!
particular account, set up an appoint-     your child's bank statements. Starting     clarify your own. Additionally, being        However, giving your children a
                                                                                      well organised, especially in respect       sound financial understanding and
ment to attend with your child. Ex-        out with an organised record-keeping
                                                                                      of financial information, will remove         encouraging a strong sense of
plain that a bank is a place you put       system will be invaluable when your                                                   character will guarantee a successful
your money until you need it. Your         child gets older and has to grapple        many of the fears that keep people                 and balanced future.
child should be old enough to have         with taxes and accounting.                 from investing later in life - particu-
an understanding of compound inter-        When the statements arrive, go             larly the misconception that it is too

Making sure
Promises are like babies: easy to make but hard to deliver. And so it is the harsh reality of commerce, that creditors
cannot always be persuaded to give credit to a debtor merely on the faith of the debtor’s promise. Even with the best
intentions, a debtor may be unable to fulfil his debts - and if the debtor has no assets, then the debtor’s broken promises
will be poor consolation for the creditor for the loss of his money.

For this reason, it is very common                                                    tract of suretyship is that it creates a
                                                       LEGAL WISE
for a creditor, such as a financial                                                   separate but ancillary obligation: the
institution, retailer or landlord to       when applying for credit facilities        surety’s obligation, while independent
require that another person other          from suppliers or when leasing prem-       from that of the debtor, only exists if
than their debtor guarantee payment        ises, equipment or a vehicle for the       there is a valid underlying principal
of the debtor’s obligations in the         business.                                  debt. If the principal debt is extin-
event of the latter’s default.                                                        guished (such as by payment in full by
A common form of security provided
in these circumstances is the con-
                                           Similarly, a married couple seeking to
                                           protect their interests may have the
                                           risk-taking (and thus intentionally less
                                                                                      the principal debtor) then the
                                                                                      surety’s obligation is likewise extin-     “Credit is a system
tract of suretyship. A contract of         asset-rich) spouse incur the couple’s
suretyship is entered into when a
person (called the “surety”) agrees
                                           debt in his or her name only. In these
                                           circumstances, the creditor’s claim
                                                                                      The surety can stand surety for the
                                                                                      full principal debt (an “unlimited
                                                                                                                                  whereby a person
with the creditor of another person        rests against the debtor-spouse;           surety”), or he may place a limit on
(called the “principal debtor”) to be      there is usually no claim against the      his exposure. The surety could even        who cannot pay gets
liable for any part of the obligation      other spouse’s assets (this applies        commit to a “continuing suretyship”
(called the “principal debt”) that the                                                whereby he agrees to stand good for
principal debtor does not fulfil.
                                           only if the couple are married OUT
                                           of community of property). Thus the        the outstanding amount owing by the        another person who
                                           smart creditor will request the            debtor to a particular creditor from
What a bank wants
In business, the limited liability rules
                                           debtor’s spouse to stand surety for        time to time.                                   cannot pay to
                                           the debt, ensuring that he can lay         The suretyship contract: a wolf in
applicable to corporate entities usu-      claim to both spouse’s assets.
ally protect the business owner from
                                           Also, in a situation where a debtor
                                                                                      Latin clothing
                                                                                                                                  guarantee that he
personal liability for his or her com-                                                The consequences of standing as a
                                           cannot provide adequate security to
                                                                                                                                          can pay.”
pany’s debts. If a company or close                                                   surety can be far-reaching and poten-
corporation cannot pay its debts, the      the creditor for their debt, or where      tially devastating for the surety. For
individuals owning the entity are not      a debtor lacks a regular income, such      this reason our law provides some
normally liable. For this reason, be-      as the granting of a study loan to a       protection for the surety.
fore granting credit to a business, a      student, the creditor is likely to
                                           demand that the debtor persuade a          The contract of suretyship is one of
creditor often requires business                                                      the few in our law that is required to             Charles Dickens
owners to sign as surety for their         more (financially) established person
                                           to stand surety for the debt.              be concluded in writing in order to                 British Novelist
company’s liabilities. For example,                                                   be valid. In order to avoid unneces-
the business owner is likely to be         Law of suretyship 101                      sary legal disputes, the suretyship
required to sign surety for a business                                                contract must be signed by or on
overdraft or loan from a bank, or          A distinguishing feature of the con-
                                                                                                                                                                                                                             Page 4

                                        The Finmar Financial Informer
                                       (Continued from page 3)                                           for his company. Failing to read the                               affairs of the principal debtor at the
                                       behalf of the surety and must dis-                                “small print” is a dangerous habit as                              time the debts are incurred. As long
                                       close the identities of the creditor,                             the law generally holds a person                                   as the principal debt exists, the
                                       the principal debtor, the surety and                              liable for the commitments they                                    surety is potentially liable.
                                       the nature and amount of the princi-                              make in contracts. However, in sign-                               The best advice to give a person
                                       pal debt. But the commercial reality                              ing what appears to be a credit appli-
                                                                                                                                                                            asked to sign a surety is…. don’t!
                                       is that sometimes a suretyship con-                               cation, there have been cases where
                                                                                                                                                                            The reality though is that often the
                                       tract is prepared “in blank”. Here the                            the company director or officer fails
                                                                                                                                                                            would-be creditor and debtor’s
                                       surety signs a pre-printed surety                                 to notice a small but not insignificant
                                                                                                                                                                            bargaining positions are unequal; the
                                       document leaving blank spaces, in-                                clause buried somewhere in the                                     creditor’s demand for a surety could
                                       tending for the creditor to fill in the                           “small print” whereby he unwittingly
                                                                                                                                                                            be a prerequisite to obtain credit. If
                                       crucial details at a later stage. There                           agrees to stand personal surety for
                                                                                                                                                                            you must sign as a surety, the follow-
                                       are a number of court judgments in                                the company’s liabilities.                                         ing guidelines might help:
                                       which sureties have been exonerated
                                                                                                         In situations such as these, the courts
                                       from liability where this happens, as                                                                                                •   understand the terms of the sure-
                                                                                                         have on occasion exonerated the
                                       signing “in blank” does not meet the                                                                                                     tyship contract, especially the
                                                                                                         fortunate surety from liability where
                                       legal requirements.                                                                                                                      creepy Latin stuff – get advice from
                                                                                                         the creditor fails to draw the specific
                                       According to our common law, vari-                                attention of the surety to the fact                                    a lawyer if necessary
          Check it Out!                ous other defences are available to a                             that there is such an obligation in the                            •   accurately describe (and restrict)
 Make sure when signing a contract     surety. An example is the require-                                main contract.                                                         the nature of the debt for which
that you do not unwittingly agree to   ment that the creditor must first                                                                                                        you intend standing surety – eg. all
                                                                                                         Till death us do part
  stand surety in the “small print”!   proceed (or “excuss”) against the                                                                                                        indebtedness or just a home loan,
                                       principal debtor, and only if unsuc-                              Not even the surety’s death releases
                                                                                                                                                                                overdraft, rental etc
                                       cessful may they turn to the surety.                              him (or more accurately, his estate)
                                       Also, where more than one person                                  from the clutches of a suretyship                                  •   put a maximum limit on your liabil-
                                       has stood surety for a debt, the law                              contract. When a surety dies, the                                      ity if possible
                                       allows the surety who is called on to                             creditor must be persuaded to re-
                                       pay up to insist that the creditor                                lease the surety’s estate from its                                 •   don’t leave blank spaces in the
                                       claim pro rata contributions from any                             obligations before the deceased’s                                      contract – it might be impossible
                                       co-sureties. The effect of this will be                           estate can be properly wound-up and                                    (and expensive) to prove later that
                                       that each co-surety is liable only for                            all the deceased surety’s assets                                       the final document was not what
 Where a company director or                                                                                                                                                    you signed
                                       his or her proportionate amount of                                passed to his heirs. The creditor may
business owner stands surety for       the debt.                                                         demand that the principal debtor                                   •   understand that so long as the
     a company’s debts, the                                                                              and/or the deceased estate settle the                                  principal debt exists, the creditor
                                       However, as interesting as these
  obligation normally remains                                                                            principal debt, or that an appropriate                                 may call on you to pay – even
                                       common law protections may be to a                                sum in the estate be set aside as
   binding the executor of the         law student, in commercial practice                                                                                                      years after you signed the contract
                                                                                                         cover for the payment of the debt in
    surety’s deceased estate.          they are worthless. Even the mod-
                                                                                                         due course. Either possibility could                               •   ensure you get written proof from
                                       estly knowledgeable creditor simply
 The surety’s death (or disabil-                                                                         have serious repercussions for the                                     the creditor if they agree to re-
                                       provides in the suretyship contract
  ity) may result in the surety’s                                                                        winding-up of the estate, involving                                    lease you from the suretyship – for
                                       (often using Latin expressions which                              lengthy delays and a possible cash                                     example, if you sell your business
estate being forced to settle the      are unintelligible to the surety) that
                                                                                                         shortage in the estate. Business own-                                  and the new owner agrees to
company’s liability to the credi-      the surety waives these various de-
                                                                                                         ers in particular need to address this                                 “procure your release” from sure-
                                       fences. Often the surety also sign as                             problem as they often sign a host of
 tor. This would lead to the re-                                                                                                                                                ties you have undertaken for the
                                       “co-principal debtor” – in this situa-
   duction or insolvency of the                                                                          sureties for suppliers, banks and                                      business, get written unambiguous
                                       tion the surety has the same obliga-
                                                                                                         landlords.                                                             proof from the creditor of this
 surety’s estate, which could be       tions as the principal debtor and
                                                                                                         Let the surety beware                                                  having been done
disastrous for the surety’s heirs.     cannot raise the common law de-
                                       fences.                                                           Generally, provided the legal require-                             •   seek legal advice before paying up
The company should take out a                                                                                                                                                   as surety – you should ascertain
                                       Signing on the dotted line                                        ments for a valid suretyship are met,
  life policy on the surety and                                                                          the surety is bound to make good                                       your rights against the creditor,
bind itself to the surety that the     Legal contracts are seldom short and                                                                                                     principal debtor and co-sureties
                                                                                                         any failure by the debtor to pay his
                                       to-the-point. Lacking the time, incli-
proceeds will be used to settle                                                                          debt. Depending on the terms of the
                                       nation or access to a magnifying glass                                                                                               •   heed the words of the wise King
 the liability thus enabling the                                                                         suretyship, the surety could be held
                                       to read the “small print”, a company                                                                                                     Solomon in the bible - “He who
                                                                                                         liable for debts of the debtor years
 surety’s estate to be released.       officer or business owner might                                                                                                          puts up security for another will
                                                                                                         after signing as surety, and whether
                                       simply sign a credit application in-                                                                                                     surely suffer” (Proverbs 11:15 New
                                                                                                         or not the surety is involved in the
                                       tending only to obtain credit facilities                                                                                                 International Version Bible)

 LESSONS FROM LAW                        Lesson 1: “Read the small print” (Sorry, this really is the small print!)
                                         In 1991, a Johannesburg company director, Mr F, signed the standard application form of a famous international credit card company for credit cards to be
                                         issued to his company. He failed to notice a clause in the “small print” in which he agreed to stand surety for the card debts of the company. When the com-
                                         pany was unable to pay, the credit card company sued Mr F in his personal capacity. The court found that it was clear he had not reasonably intended to sign as
                                         surety and it had not been made sufficiently clear to him that there was a suretyship clause in the contract. The court refused to grant judgment against Mr F.
                                         Lesson 2: “Get it in writing”
                                         In 1987, a Cape Town businessman, Mr H, started a computer business and signed an unlimited surety for its current and future banking facilities. The business
                                         was sold to another company that was listed on the stock exchange. The listed company agreed to negotiate his release as surety. Mr H remained with the
                                         listed company until 1999 when he had a fallout with the board of directors and left the company. He believed that he had been released from his surety obliga-
                                         tions. Some years later, the listed company was liquidated and the bank sued Mr H for payment in terms of the surety contract. The contract required the
                                         bank’s release of Mr H in writing before the suretyship could be considered legally cancelled. As Mr H had never received a clear written release signed on
                                         behalf of the bank, he was held personally liable for the company’s banking debts of R11 million.

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