Waiver of legal exceptions

This is a continuation from last week’s article on sureties.

YOU may be aware of those dreaded Latin clauses in security agreements, which are regularly waived by the sureties or guarantors.

There are various clauses that are waived in surety agreements. In most cases, for suretyship and acknowledgements, clients are asked by bankers and financial institutions or, in the ordinary course of entering into an agreement, to renounce the legal exceptions non numeratae pecuniae, non-causa debiti, errore calculi, revision of accounts and no value received.

The tendency for most people is just to go to the dotted lines without applying their minds to the import of what they are renouncing in the first place. What you are doing is actually renouncing the legal protection accorded by those legal exceptions.

What do those exceptions mean?

This a complex area of law, but I will endeavour to simplify the meaning and legal effect of those exceptions and benefits. Once you renounce the benefits, a financial institution or a creditor is entitled, in terms of the law, to recover the full debt from the person who renounced these benefits. This also applies where there is a debtor and a surety and/or joint debtors.

Beneficium ordinis seu excussionis et divisionis

This means the creditor must first proceed against the principal debtor and once it has exhausted its remedies against the principal debtor, it can look to the surety for payment. The effect of waiving this benefit is that it entitles a creditor to claim payment from the surety without first exhausting the legal remedies against the principal debtor. The surety cannot insist that he or she is liable for more than his or her pro rata share of the debt.

Beneficium de duobus vel pluribus reis debendi:

This is a legal exception that is applicable in cases where there are two or more principal debtors who are liable jointly but not several times, meaning, each one is liable only for his/her share of the debt.

In the event of the creditor claiming the full amount of the debt from one of the debtors, the debtor from whom the full amount is claimed can provide himself of this benefit, thereby avoid having to pay more than his share of the debt.

The effect of waiving this benefit by a co-debtor or surety is that it entitles the creditor to recover the full debt from such a co-debtor’s surety, without first requiring payment from the other debtor or the principal debtor. Exceptio non causa debiti

The “exceptio non causa debiti” is a legal exception at the instance of a debtor, where they can argue that there is no just cause for the debt as the principal obligation does not exist. ◆ Read more on: www.sundaymail. co.zw ◆ Arthur Marara is a practising attorney, author, human capital trainer and business speaker.