Case Note: National Credit Regulator v Standard Bank of South Africa Limited: Common-law Right of Set-off Excluded from Credit Agreements Under The National Credit Act

• Jurisdiction: South Africa
• Citation: (2019) 31 SA Merc LJ 341
• Author: Reddy, N.
• Pages: 341-355
• Published date: 17 June 2020
• Date: 17 June 2020

Case Note

NATIONAL CREDIT REGULATOR V

STANDARD BANK OF SOUTH AFRICA

LIMITED: COMMON-LAW RIGHT OF

SET-OFF EXCLUDED FROM CREDIT

AGREEMENTS UNDER THE NATIONAL

CREDIT ACT

NIRISSA REDDY*

Department of Law, North West University

IINTRODUCTION

In general terms, set-off can be described as the extinguishing of debts

owed reciprocally by two parties (Bradf‌ield, Christie’s Law of Contract in

South Africa 7 ed (LexisNexis 2016) 552; Sharrock, ‘Proof of claims’, Law

of South Africa vol 11, 2 ed replacement (LexisNexis 2008) para 314). The

common-law principle of set-off takes place when two parties are

mutually indebted and those debts effectively extinguish each other as if

payment had taken place (Bradf‌ield, (LexisNexis 2016) 552; Sharrock

(LexisNexis 2008) para 314). Where the debts are not for the same

amount, only the smaller debt and concomitant obligations cancel out.

Thus, the larger debt is reduced by the amount of the smaller debt

(Bradf‌ield, (LexisNexis 2016) 552; Harms, ‘Termination of obligations’,

Law of South Africa vol 19, 2 ed replacement (LexisNexis 2016) para

244).

Set-off operates automatically (Bradf‌ield, (LexisNexis 2016) 557–558;

Sharrock et al, The Law of Banking and Payment in South Africa (Juta

Law 2016) 238) when certain general requirements are met (Harms,

*This case note is based on research undertaken in fulf‌ilment of the requirements of the

degree of Master of Laws in commercial law at the Department of Mercantile Law at the

University of South Africa under the invaluable supervision of Professor PN Stoop and Mrs

AN Wagener. Submitted in November 2018 under the title ‘‘The Legality of Banks’

Application of the Common-law Principle of Set-off to Customers’ Accounts under the

National Credit Act 34 of 2005’’.

341

(2019) 31 SA Merc LJ 341

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