Abstract
LL.M. (Commercial Law)
It is commonly known that most people enter into credit agreements and certain contracts where they then owe money which in most cases is encompassed by interest. As we live in a democratic constitution there is a great need for the protection of the rights of all those who live in the Republic, both the consumer and the creditor must be protected with a strike of a clear balance regarding their rights. Interest on money owed or borrowed may run to an extent where the consumer is unable to pay off the debt owed due to certain economic conditions and the heavy burden on the amount owed. Therefore, there has been an introduction of the so-called in duplum rule which is a principle in credit law used to protect consumers and debtors. It operates in the instance where interest charged exceeds the principal debt owed and according to the rule the interest will then be capped when it reaches an amount which is equal the outstanding principal debt. There exists the common-law in duplum rule and the statutory in duplum rule. These rules are aimed at limiting interest charged once it reaches an amount which equals the outstanding principal debt which is called “the double”. However, these rules differ in their scope of coverage as the common law rule covers all forms of agreements which bear interest and the statutory rule covers agreements falling under the regulation of the National Credit Act as it also includes charges under section 101(1)(b)-(g) of the Act and the extended application of interest as contained in section 103. The in duplum rule as a general rule is stated to apply to all credit agreements and contracts between people where there is interest bearing, however case law and legislation stipulate circumstances where the rule does not apply. The dissertation will discuss the exclusion of certain consumers and debtors such as juristic persons (irrespective of their threshold) under the statutory rule and the critical analysis of the application of both rules. Should a person’s credit contract or agreement fall under the common law rule they shall then not receive the protection offered under the statutory rule as it provides an extended protection and an effective protective mechanism to debtors to escape exploitation from credit providers. However, due to certain impediments arising from the extension of the rule to certain debts such as fiscal debts, courts have inter alia reached a dictum that such debts should remain uncovered by the rule. With such debts remaining uncovered, debt relief for other consumers is farfetched. Certain consumers and debtors are excluded under the statutory in duplum rule which limits their rights to access to credit facilities and protection under the National Credit Act. With such lack of proper protection to all consumers and debtors, this raise concerns on the sufficiency of the rule and equality for all in the commercial market. It is also questionable as to whether the rule serves as a debt relief mechanism for all, considering its limited application in the South African economy. Many people rely on credit in order to meet some of their needs and expenses in life which comes with the need for the vigorous application of the rule to provide protection.