Have your cake and eat it

Abstract

In this discussion of Carrim v Omarl/Ig the authors highlight two aspects of the case, namely the nature of suretyship and the interaction between Islamic law and the common law. Both authors discuss the complexities of suretyship and other forms of personal security. Scott thoroughly evaluates the interaction between Islamic law and the common law in three recent cases. In Carrim v Omarl/Ig Mrs Omar invested money in the Islamic Bank on the advice of Mr Omar and through him as her agent. Mrs Omar is a very religious person and a devout Muslim. She withdrew her investment from Volkskas Bank because she was uneasy about accepting interest which is lIgharaml/Ig and not lIghalall/Ig in terms of Islamic law. The Islamic institution of a Mudhaarahbah contract determined the nature of the legal relationship between Mrs Omar and the Islamic Bank. This contract is similar to a common-law partnership. In terms of the contract the investor shares in the profits of the investment, but losses are shared equally by all the investors to the amount of their investment. The Islamic Bank was liquidated and Mrs Omar claimed the amount of her investment plus interest from Mr Carrim. She based her claim on an oral guarantee by Mr Carrim that she will not loose any money by investing in the Islamic Bank. Mr Carrim denied the existence of this guarantee and, in the alternative, that if such a guarantee existed, it was void since it did not conform to the formalities prescribed in the General Law Amendment Act 50 of 1956. In the court a quol/Ig the claim succeeded and Mr Carrim appealed against this judgment. The majority of the court held that Mr Carrim undertook a primary obligation, not an accessory one dependant on a principal debt. Therefore, the General Law Amendment Act was not applicable. The appeal was consequently dismissed. In a minority judgment Stegmann J devoted 36 pages of the judgment to criticism of Caney's definition of suretyship and the nature of suretyship. At the beginning he indicated that his judgment is incomplete, but that, due to pressure from his fellow judges, he was unable to pursue the matter further. He upheld the appeal of Mr Carrim. Both authors refer to the uncertainty surrounding personal security in South African law and to a certain extent also in Belgian and French law. Scott is of opinion that the General Law Amendment Act is applicable not only in the case of accessory personal security, but in all forms of personal security. In the absence of a clear choice of law by all parties concerned, Scott further questions the court's application of Islamic Law to determine the legal relationship between Mrs Omar and the Islamic Bank, but the common law to determine the consequences of the relationship between Mrs Omar and Mr Carrim. Scott is generally critical of partial application of Islamic Law and common law to the same set of facts.