The In Duplum Rule ' How Far Does It Go? Limited To Credit Agreements ' Or Not?

• Published date: 04 August 2020
• Law Firm: Schoemanlaw Inc.
• Author: Ms Nicolene Schoeman-Louw

The in duplum rule has been part of South African law for more than 100 years, translated, in duplum means 'double the amount'. This common law rule provides that interest on a debt will cease to run where the total amount of arrear interest has accrued to an amount equal to the outstanding principal indebtedness.

It was developed in response to considerations of public interest and sought to protect borrowers from exploitation by lenders who permit interest to accumulate unchecked. It also has the effect of encouraging lenders to exercise their rights to be repaid, promptly and without delay.

Section 103(5) of the National Credit Act (NCA) 34 of 2005 as amended, incorporates a statutory version of the in duplum rule. This section provides that: 'Despite any provision of the common law or a credit agreement to the contrary, the amounts contemplated in section 101 (1) (b) to (g) that accrue during the time that a consumer is in default under the credit agreement may not, in aggregate, exceed the unpaid balance...