South Africa: Correctly Applying The In Duplum Rule

Last Updated: 26 September 2013
Article by Walter Palk

The in duplum rule has been part of South African law for more than 100 years, being applied through South African case law from as early as 1830. Literally translated, in duplum means 'double the amount'. This common law rule provides that interest on a debt will cease to run where the total amount of arrear interest has accrued to an amount equal to the outstanding principal debt. It was developed in response to considerations of public interest, and seeks to protect borrowers from exploitation by lenders who permit interest to accumulate unchecked. It also has the effect of encouraging lenders to exercise their rights to be repaid, promptly and without delay.

The National Credit Act (NCA), No 34 of 2005, incorporates a statutory version of the in duplum rule in section 103(5), which is commonly referred to as the statutory in duplum rule. This section provides that "Despite any provision of the common law or a credit agreement to the contrary, the amounts contemplated in section 101 (1) (b) to (g) that accrue during the time that a consumer is in default under the credit agreement may not, in aggregate, exceed the unpaid balance of the principal debt under that credit agreement as at the time that the default occurs." The amounts referred to in section 101(1)(b) to (g) include: initiation fees, service fees, interest, the cost of any credit insurance, default administration charges and collection costs (charges).

The in duplum rule, in both its guises, has been the subject of much academic debate and juristic opinion. As the application of these rules has very real, and sometimes costly, ramifications, particularly for an impoverished debtor, the focus of this debate and challenge has been particularly prevalent in the field of credit agreements and the new creditor protection regime ushered in with the NCA.

The statutory in duplum rule is not a mere 'codification' of the common law in duplum rule and differs from the common law rule in a number of significant respects. As already mentioned, the common law in duplum rule applies only to unpaid interest, whereas the statutory rule includes a number of costs, in addition to interest, which in aggregate may not exceed the unpaid principal debt at any point while the consumer is in default under a credit agreement. The statutory in duplum rule is, as such, more onerous on credit providers in that the 'in duplum limit' will be reached much sooner than the common law limit would have been reached.

Importantly, the common law in duplum rule does not bar interest from accruing again once the outstanding interest has been reduced below the 'in duplum limit'. In other words, if a payment is made and the amount outstanding is reduced below the outstanding principal debt, the in duplum rule will no longer apply and interest can start running until it reaches the 'in duplum limit' once again. Whereas the statutory rule applies for the entire duration of the default, meaning that as long as a consumer remains in default of his/her payment obligations, the credit provider is not entitled to levy any further charges, notwithstanding that a consumer may reduce the outstanding charges through repayments, which is in stark contrast to the common law rule.

As a result of its wider ambit, the statutory rule provides greater consumer protection, whilst credit providers are left considerably worse-off.

The interaction between common law and statutory in duplum

Does the statutory rule override the common law rule or can both rules apply simultaneously? Alternatively, is there an election regarding which rule to apply?

In the Nedbank case the Supreme Court of Appeal confirmed that the statutory in duplum rule is by no means a mere codification of the common law rule. The SCA stated that this is explicitly indicated in the introductory words of section 103(5), "despite any provision of the common the contrary." Instead, according to the SCA, the statutory in duplum rule embodies a distinct rule, which effectively extends the ambit of the common law rule that is applicable to a limited category of agreements (ie those agreements regulated by the NCA). For all other credit agreements not regulated by the NCA, the common law rule still applies. In other words, the statutory in duplum rule applies to all credit agreements under the NCA, to the exclusion of the common law in duplum rule, and there is no election as to which rule to apply. Importantly, credit providers are precluded from trying to contract out of the statutory in duplum rule.

Statutory in duplum: practical difficulties

There remains a lot of uncertainty regarding the application of the statutory in duplum rule in practice, which has resulted in much litigation and resultant judicial interpretation. For example, there is no clear indication of all the charges that may fall within the ambit of section 101(1)(b) to (g). In practice, it is still unclear what range of costs would qualify as "service costs" or "collection costs". Would collection costs include the costs of third-party debt collection agents that have been appointed? It is necessary to understand the ambit of each of the charges listed in section 101, as this will have a very real impact on the in duplum calculation for section 103(5).

As section 103(5) is applicable for the entire duration that the consumer is in 'default', credit providers must have a clear understanding of when a default as contemplated may arise, the events that encompass a default, as well as the events that extinguish that default. This may be particularly pertinent in the circumstances where credit providers 'restructure' a consumer's debt in an effort to assist consumers to meet their obligations (for example, through a change in the repayment terms) – does this restructuring end the default in question, or does the original default persist?

Another interpretational difficulty has arisen in the context of credit life insurance, which is included in the calculation of the in duplum amount. Very briefly, credit life insurance is a form of insurance paid on a loan, where, upon the occurrence of certain insured events (such as death, disability or retrenchment of the debtor/insured), the insurer will pay out the outstanding capital on a short- or long-term debt to the credit provider. This insurance is usually required by credit providers as per section 106 of the NCA as a condition to providing credit to consumers. There is the very real possibility that the application of the in duplum rule, which is intended to protect the debtor, may actually prejudice the debtor in these circumstances – in that the statutory in duplum rule may prevent the consumer from paying, and the credit provider from receiving, any premiums on the consumer's credit life insurance policy. For the entire duration of the default after the in duplum limit has been reached, the creditor will not be obliged or be able to pay any premiums towards the credit life insurance.

Statutory in duplum in practice: compliance

The statutory in duplum provisions are being misinterpreted and incorrectly applied by many credit providers, placing them at risk of a breach of section 103(5). This may be a consequence of the confusion between the application of the common law in duplum rule and the statutory in duplum rule, and the interpretational difficulties accompanying the statutory in duplum rule. The result, however, is that credit providers are being placed at risk of non-compliance with section 103(5) of the NCA.

This statutory in duplum rule applies to all credit providers providing credit in terms of the NCA, including banks, motor vehicle and asset finance companies and all financial institutions that extend credit as part of their business. A failure to adhere to the statutory in duplum rule will result in a breach of the NCA, exposing credit providers to regulatory censure. In addition to this regulatory risk, a breach of the statutory in duplum rule may also expose credit providers to reputational risk and financial risk. The consequences of failing to properly apply the statutory in duplum rule can be significant and it is therefore very important that all credit providers consider how section 103(5) of the NCA is being applied in their businesses and are they compliant and further consider whether any remedial action is required to correct any potential contraventions thereof.

KPMG has designed a methodology to assist credit providers in identifying and remedying breaches of the statutory in duplum rule. The model will assist with the identification and analysis of breaches and potential breaches of the in duplum principle with our clients' product environments and details the processes to be applied in remedying such breaches.

About Finn Elliott

Provides legal and regulatory support to clients in the financial services sector on their regulatory oversight, including legal opinions and advice on FAIS, FICA, NCA, FMA, CISCA and JSE Rules.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.