What is “extinctive prescription” and why is it so important?

In legal proceedings, if a debtor successfully raises the defence of “extinctive prescription”, then the claim against him or her is made permanently unenforceable. This will be the case regardless of whether the claim is legally valid in all respects, or the creditor enforcing the claim has ample or even irrefutable evidence proving his or her claim.

The defence becomes available as a result of a period of time, set out in the law, having passed since the claim came into being. These periods of time are, largely, set out in the Prescription Act.

If a debtor satisfies a claim – for example, repays a debt – despite the fact that the defence of extinctive prescription was available to him or her because of the length of time that had passed since the debt became due, she or he cannot insist on repayment of the money paid. The debtor must raise the defence before satisfying the claim, or will have lost the opportunity. Where the claim is in court, the court is not allowed to raise the matter of prescription of its own accord, thereby potentially depriving a creditor of satisfaction of its claim.

These are the prescription periods set out in the Act:

  • Three years: debts not covered specifically elsewhere in the Act of other legislation;
  • Six years: debts arising from bills of exchange or negotiable instruments (such as cheques or promissory notes), or notarial contracts (with exceptions);
  • Fifteen years: debts to the state arising from sales, leases, loans or advances (with exceptions);
  • Thirty years: debts secured by mortgage bond, debts in respect of which a judgment has been issued, taxation debts (eg income tax, VAT), and debts to the state in respect of profits and royalties.

The prescription period starts to run as soon as the debt becomes legally due. A debt does not become due in law until the creditor is – or ought to be through the exercise of reasonable care – aware of the identity of the debtor and the facts giving rise to the debt. For example, where a person has suffered harm but has not been able to ascertain who caused the harm despite exercising reasonable care, the claim for damages for that harm will not prescribe at once.

Certain events delay the running of prescription, for example the creditor lacking legal competence (due to factors such as youth or a period of mental incapacity).

Prescription can be interrupted by the debtor acknowledging his or her liability, or the creditor serving upon the debtor legal process claiming the debt. If the creditor manages to serve summons on the debtor claiming payment of the debt one day shy of the three year period ending, then the claim will remain valid pending finalisation of the court case.

 

Advertisements

One thought on “What is “extinctive prescription” and why is it so important?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s