South African Breweries Limited v Van Zyl

Gensam (Pty) Ltd operated a liquor business and obtained credit from South African Breweries Ltd (SAB 69). Its directors, including the respondent Van Zyl, signed deeds of suretyship in favour of SAB 69 for amounts that may become owing by Gensam. In 1999 SAB 69 sold its beer division as a going concern to Lexshell, ceding its rights to its debtors. Lexshell later became South African Breweries Ltd (SAB 98). SAB 98 continued to supply liquor on credit to Gensam. When Gensam defaulted, SAB 98 sued Gensam and its directors as sureties for over R515 000. Van Zyl defended the action, arguing that his suretyship did not cover debts incurred after the cession.

The appeal was dismissed with costs; the respondent was not liable as surety for debts incurred after the cession.

The case clarifies South African law on cession and suretyship by confirming that a surety is only liable for debts existing at the time of cession unless the suretyship expressly provides otherwise. It firmly distinguishes cession from the operation of 'huur gaat voor koop' and limits the extension of surety liability in commercial transactions.