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Renunciation and Waiver as it relates to Prescription of Debts
04 April 2023
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Prescription is when a debt (obligation to pay) is extinguished after a period of time.
There have been various judgements dealing with the difference between renunciation and waiver in terms of prescription.
Renunciation is a matter of contract. Renunciation will require a tacit/express undertaking or promise to pay the prescribed debt. Renunciation is in effect a new agreement to renew the debt after it had become prescribed.
Waiver needs to take place before prescription, however, if the waiver is against public policy or affects a right or interest, waiver is not possible. Further, renunciation is allowable, but only to the extent that it is a contract between the parties concluded after prescription has lapsed.
The Common Law position is that one cannot legally commit oneself to not rely on prescription, otherwise the entire institution of prescription could effectively be defeated. This is regarded as contra bonos mores. This includes agreements that describe waiver/renunciation before prescription has run out.
Currently, the common law position stands because of the conflicting case law surrounding this matter. Especially given the requirement that a waiver/renunciation needs to be fair, just and equitable.
Unfortunately, there is no guarantee that the debtor will conclude an agreement (acknowledgement of debt) after prescription has lapsed, therefore, it is advisable that summons needs to be issued before prescription has lapsed.
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