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What constitutes a debt?
01 November 2019  | Puleng Valentine Tladi

One would think that debt is that which is owed or owing or due to another , in a form of applying for a loan, money owed for services rendered etc.

However debt is very broad and the term is normally restricted in almost all the legistation,for example, the Prescription Act of 1969, National Credit Act 34 of 2005 etc.

What constitutes debt, depends on the circumstances of each case, for example where a respondent in a maintence matter is in arrears, or where the Road accident fund fails to pay the claimaint whereas judgement was obtained against it as the entity, such constitutes debt. There are also situations where a person buys a vehicle and a financial provider furnishes him or her with financial assitance, that consititutes debt. There are also cases where there is an agreement between A and B , the terms of the contract are as follows: A is to renovate and both A and B will share the profits if B sells the house,however B will be indebted to A only if and when he decides to sell the house and if B doesnt sell the house, B will not be indebted to A. There are also instances where there was an agreement between the lessor and lessee, for rates and taxes, and where the lessee defaults in his payment to the municpality. In such instance, the lessor will be liable to pay the municipality as the owner of the property and only when she pays his/her account, will the lessee be indebeted to the lessor for municipal rates and taxes paid by the lessor to the municipality.

Regarding the issue of prescription, The Constitutional Court in KN Makate v Vodacom (Pty) Ltd [2016] ZACC 13, held that Mr Makate’s claim was not a debt as contemplated by the Prescription Act of 1969. The Court further held that, the meaning of debt had to be construed in light of section 39 (2) of the Constitution. This ruling will surely have an impact on what constitutes debt especially within the scope of the Prescription Act of 1969.


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