Prescription and what it means
Prescription is a term we hear so often, but what does it mean?
What does prescription mean?
- Prescription can be explained as old debt/duties that have not been acknowledged over a period of three years.
- In terms of the Prescription Act 68 of 1969 (“the Act”), a debt shall be extinguished by prescription after a lapse of the three years.
- South Africa has different laws which governs prescription periods, for example, the Prescription Act states that contractual and delictual debts lapse after three years from the date when it became payable (due).
What is the legal position if a debt has prescribed after three years?
- Every cause of action must be prosecuted within a certain period of time, failing which it will prescribe.
- Ultimately, the obligation to rectify a certain debt/duty can automatically become unenforceable (lapse) after an uninterrupted period of three years.
- A debtor, who is indebted to a creditor, will not be liable to pay such debt after three years has passed.
- This means that the creditor may not institute legal action against the debtor to recover such a debt.
When does a prescription period start to run?
- Section 12(3) in turn provides that a debt shall not be deemed to be due until the creditor has knowledge of the debtor’s identity; and of the facts from which the debt arises, provided that a creditor shall be deemed to have such knowledge if he or she could have acquired it by exercising reasonable care.
- This means that a claim for contractual damages does not arise until the creditor knows or could reasonably have known about the breach. However, sometimes prescription might only begin to run after the date on which the creditor knew of the breach as all the elements of the creditor’s cause of action, such as whether any loss would be caused by the breach, may not have been apparent at that stage.
Factors to consider when prescription may be delayed
- A prescription period is delayed if one of the following restrictions apply:
- creditor is a minor, insane, or under curatorship;
- debtor is outside South Africa;
- creditor and the debtor are married to each other;
- creditor and the debtor are partners and the debt arose from a partnership agreement;
- debtor is a member of the creditor, being a governing body an organization or business.
- debt is the object of a dispute in an arbitration; or
- executor of a deceased estate has not yet been appointed.
- Such a restriction will stop on, after or within one year before the normal prescription period will end. If this happens, one year will be added after the date on which the restriction stopped.
- To put it into perspective, if a debt becomes due on 15 January 2009, it will prescribe within a period of three years; the prescription period will end on 14 January 2012 (“normal prescription period”). On 15 January 2009 the debtor:
- leaves South Africa for six months. This means that the debtor will return on 15 July 2010, which is more than one year before the normal prescription period will end. The prescription period will not be affected and will still end on 14 January 2012;
- leaves South Africa for 18 months. This means that the debtor will return on 15 July 2011, which is within one year before the normal prescription period will end. One year must be added from the date on which the restriction has stopped, and the new prescription date is 14 July 2012; or
- leaves South Africa for three years. This means that the debtor will return on 15 January 2012, which is after the normal prescription period ended. One year must be added from the date on which the restriction has stopped, and the new prescription date is 14 January 2014.
How does interruption of the prescription period occur?
- The running of prescription is interrupted by:
- an acknowledgment of debt by a debtor, for example, if a debtor pays part of his/her debt to the creditor before prescription; or
- a summons served by the creditor on the debtor in order to claim payment of the debt due
The different prescription periods are as follows:
– In terms of section 11 the prescription period is 30 years for debts secured by mortgage bond, judgment debts, any debt in respect of any taxation imposed or levied by
or under any law etc.
– 15 years for certain debts owed to the State.
– 6 years for debts arising from a bill of exchange, notarial contract, etc.
– 3 years in other cases; unless an Act of Parliament provides otherwise, this includes but are not limited to labour matters, civil matters and road accident fund claims.
Contact us immediately to advise you on prescription of your case or matter.
Article written by Gerhardt Smith (candidate legal practitioner) at the Bloemfontein office.
T: 051 433 1415