The in duplum Rule: Relief for Consumers of Excessively Priced Small Credit Legitimised by the National Credit Act

• Jurisdiction: South Africa
• Author: Jonathan Campbell
• Pages: 1-11
• Date: 25 May 2019
• Published date: 25 May 2019

Articles

The in duplum Rule: Relief for Consumers of

Excessively Priced Small Credit Legitimised by

the National Credit Act

JONATHAN CAMPBELL*

Rhodes University

1 Introduction

The National Credit Act 34 of 2005

1

as read with the National Credit

Regulations

2

prescribes limits on the cost of credit that may be charged by

credit providers. The limits on interest rates are cold comfort for consumers of

small credit, because the combined impact of interest and the newly-

introduced initiation and service fees cause the cost of small credit to be

potentially exorbitant.

3

What legal recourse does a consumer have in the face of exorbitantly priced

credit legitimised by the Act and Regulations? Contract provisions that are

contrary to public policy, as fortif‌ied by constitutional values, may be declared

unenforceable.

4

Further, excessively priced credit could be challenged on the

ground that it is usurious if it amounts to ‘extortion or oppression akin to

fraud’.

5

It is, however, unlikely that these common-law principles can

contribute signif‌icantly towards contractual fairness, especially if the agreed

cost of credit, although excessive, is within the legislated limits.

6

The common-law ‘in duplum rule’, now effectively codif‌ied and

signif‌icantly expanded by the Act,

7

has become the single most important

measure to limit the excessive cost of small credit made possible by the

Regulations and to protect consumers from entrapment by debt.

It is not the primary purpose of this article to discuss in detail the nature

* BA LLB (UCT) LLM (Rhodes). Associate Professor and Dean of the Faculty of Law, Rhodes

University.

1

Sections 100-6.

2

National Credit Act 34 of 2005: Regulations, GN R489 in Government Gazette 28864 of 31 May

2006 regs 39-48.

3

The full impact of the cost of credit provisions on small credit is thoroughly analysed in J Campbell

‘Excessive Cost of Credit under the National Credit Act’(2007) 19 SA Merc LJ 251 at 260-8.

4

See, eg, Sasfin v Beukes 1989 (1) SA 1 (A); Brisley v Drotsky 2002 (4) SA 1 (SCA); Napier v

Barkhuizen 2006 (4) SA 1 (SCA); Barkhuizen v Napier 2007 (5) SA 323 (CC).

5

Dyason v Ruthven (1860) Searle 282 at 311-2.

6

See par 2 below.

7

Section 103(5).

1

(2010) 22 SA Merc LJ 1

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