Abstract
This dissertation explores the dichotomy between the common-law principle of set-off and the modern consumer protection offered by the National Credit Act 34 of 2005. In South African law, a bank deposit is characterised as a mutuum, meaning that ownership of the deposited funds passes to the bank through commixtio, the mixing of fungible money. While this classification explains the nature of the bank-customer relationship, the right to set-off arises from the common-law principles of mutuality of debts and not from the mutuum contract itself.
Sections 90(2)(n) and 124 of the National Credit Act prohibit the automatic operation of set-off in credit agreements unless the consumer has expressly consented and authorised it. The operation of these sections raises an inciting question of whether these provisions amount to an unjustifiable infringement and limitations of the bank’s ownership and property rights, or do they reflect a necessary reformation of the law in favour of fairness, transparency, and consumer protection in an open and democratic society underpinned by constitutional values.
In addressing the controversial questions raised, the study discusses case law that directly addresses and confirms the generally accepted premise that money deposited into a customer’s bank account becomes the bank’s property, leaving the depositor with only a contractual right of repayment. Additionally, it examines the legal precedent confirming that the statutory set-off scheme prohibits the operation of common law set-off in all credit agreements subject to the National Credit Act.
Ultimately, this dissertation acknowledges that the National Credit Act’s restrictive provisions represent a policy shift aimed at redressing historical imbalances between banks and consumers. However, the pertinent question of whether these measures strike an appropriate balance or impose disproportionate limitations on banks’ proprietary rights remains contested. By examining the interaction among constitutional principles, private law, and statutory intervention, the study contributes to the ongoing development of consumer protection and commercial certainty in South Africa.