Defaulting on loan contract instalments: whenever does a creditor’s claim prescribe?

Defaulting on loan contract instalments: whenever does a creditor’s claim prescribe?

Acceleration clauses are generally discovered in loan agreements that want debtors in order to make payment in instalments. an acceleration that is standard provides that when a debtor doesn’t spend an instalment, the creditor may elect to end the mortgage contract and need re re payment of this complete amount owing beneath the contract.

Issue of prescription within the context of acceleration clauses arose recently within the Supreme Court of Appeal (“SCA”) into the full instance of Standard Bank of Southern Africa Ltd v Miracle Mile Investments 67 (Pty) Ltd and Another 2016 3 All SA 487 (SCA). In specific, the SCA had been confronted with this concern: does prescription regarding the complete quantity advanced level commence operating whenever creditor elects to enforce the acceleration clause or as soon as the debtor defaults on re re payment of a instalment?

In cases like this, in 2005, the creditor, the conventional Bank of Southern Africa (“the bank”), advanced level a personal credit line to a person debtor to a maximum value of roughly R14-million. The participants, two businesses, endured surety when it comes to principal financial obligation and permitted the enrollment of particular home loan bonds over their immovable properties, as protection for the major financial obligation. Read more