The in duplum rules in terms of the common law and the National Credit 34 of 2005

Abstract

It is common cause that consumer protection is a phenomenon that has been a subject of debate for centuries. In a modern society with developments in the economy, it is essential to ensure and maintain the balance between the rights of consumers and credit providers. The in duplum rule developed is a principle that is enforced to bar against exploitation of credit providers towards consumers and utilised as a debt relief mechanism against over-indebtedness in the credit industry. The in duplum rule operates to ensure that interest or costs associated with the debt do not go beyond the outstanding sum of the principal debt. The common law in duplum rule and the statutory in duplum rule will be explored to determine their applicability and the protection afforded by the rules. It will be seen that the rule in its two forms differs in that the common law in duplum rule is concerned with only interest. Whereas its counterpart, the statutory in duplum rule in accordance with the provision of the National Credit Act, has an extended application, as it includes, in addition to interest, “service fees, collection costs, default administration costs, costs of credit insurance, and initiation fees”. The in duplum rule is considered to apply to all credit transactions where interest is levied. However, it will be seen from case law that there are exceptions and limitations to the application of the in duplum rule. This dissertation is concerned with the species of consumer protection in the form of the in duplum rule and particularly legislation under consumer credit law. The protection afforded by the rule to parties in a credit transaction will be explored. Further discussions will be held pertaining to the limitations and/or shortcomings of the in duplum to different species of consumers and credit providers. The historical development of the in duplum rule and its application in the South African legal landscape is essential and will be analysed, and concepts such as public policy consideration will be explored.