n SA Mercantile Law Journal = SA Tydskrif vir Handelsreg - Better consumer protection under the statutory in duplum rule




The common-law in duplum rule, as it is generally known in South African law, provides that interest stops running when unpaid interest equals the outstanding capital amount. If the total amount of unpaid interest (both contractual and default interest: our courts apply the limitation to both kinds of interest: see 1973 (2) SA 137 (T) and 1990 (3) SA 387 (W)) has accrued to an amount equal to the outstanding capital sum, the defaulting debtor (ie, the borrower of the money) must first start making payments on his loan again (and so decrease the interest amount), after which interest may once again accrue to an amount equal to the outstanding capital sum. The rule thus effectively prevents unpaid interest from accruing further once it reaches the unpaid capital sum. Even if interest is capitalised (and interest is therefore charged on interest), the capitalised interest does not lose its character as interest and become part of the capital amount for purposes of applying the in duplum rule (see 1995 (4) SA 510 (C), in particular at 560 and 566-72; confirmed on appeal in 1998 (1) SA 811 SCA; unless otherwise indicated, all further references to will be to the decision on appeal).


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