De Jager and Others v Absa Bank Limited

The appellants stood surety for the debts of a partnership, D B Boerdery, to Absa Bank Ltd. The partnership’s bank debt became due during November 1991. During negotiations in 1995 aimed at settling a dispute regarding the outstanding debt, the appellants, through their attorney, signed a written and irrevocable undertaking in favour of the bank not to raise prescription as a defence in any legal proceedings. At the time the undertaking was signed, the underlying debt had already been extinguished by prescription in terms of the Prescription Act 68 of 1969. Settlement negotiations failed and in July 1996 the bank issued summons against the appellants as sureties. The appellants raised a special plea of prescription, contending that the debt and their suretyship obligations had been extinguished and that the undertaking was invalid, alternatively contrary to public policy.

The appeal was dismissed with costs, including the costs of two counsel. The appellants’ special plea of prescription was correctly rejected and the undertaking not to plead prescription was held to be valid.

This case authoritatively clarifies South African law on the effect of extinctive prescription under the Prescription Act 68 of 1969. It confirms that, although prescription extinguishes a debt, a debtor or surety may validly undertake not to rely on prescription after it has already run. The judgment draws an important distinction between advance waivers of prescription and undertakings given after prescription has been completed, thereby reinforcing contractual freedom while aligning it with the policy objectives of prescription.