ACKNOWLEDGMENT OF DEBT


First Published: April 15, 2015

ACKNOWLEDGMENT OF DEBT

Prepared by: Roselyn Mhlanga

An Acknowledgment of Debt according to Blacks Law Dictionary, 8th Edition is a written document stating recognition by a debtor of the existence of a debt. An acknowledgement of debt (AOD) is a document which contains an unequivocal admission of liability by a debtor. In it the debtor acknowledges that he or she owes a particular sum of money to the creditor and undertakes to repay the sum owed. The AOD should specify how the debt will be paid i.e. the debt is payable in a certain number of instalments.

An AOD requires nothing more than the aforementioned in order for it to be legally valid and binding on the person who has signed it.  All other terms that may be inserted in the document are incidental but are designed to protect the interests of the creditor.  The AOD usually provides that if the debtor fails to pay any one instalment the whole amount will immediately become payable. It should be noted that an AOD halts prescription

An AOD is a “liquid document”. A liquid document is a document that proves a debt without any extraneous or outside evidence to support it. An AOD should enable a creditor to obtain a speedy judgment against a debtor without having to endure a long trial in which all the facts relating to the original money lending agreement may have to be proved by the creditor.  Judgment may be given by the court for the full amount reflected in the AOD because the court is faced with a document in which the debtor has expressly acknowledged that he owes the money. Once judgment has been granted the creditor may then issue a writ of execution against the debtor’s property to the value of the judgment debt and the debtor’s property may be attached to satisfy it.

An Acknowledgement of Debt should have the following:

  • Full name of the debtor
  • Full name of the creditor
  • domicilium citandi et executandi or address of service of both parties
  • The amount in full which is being acknowledged
  • The time period in which the debt will be paid
  • The number of instalments, if any
  • The amount to be paid in each instalment
  • How payment will be made

It would be to the creditor’s benefit if the Acknowledgement of Debt included the following:

  • If the debtor fails to pay any one instalment the whole amount will immediately become payable.
  • If the debtor defaults in payment, all legal costs incurred to enforce the AOD by the creditor will be paid by the debtor.
  • If the amount owed is being paid through the creditor’s legal practitioners the debtor will pay the collection commission due to the lawyers.
  • That the acknowledgement constitutes the entire agreement between the debtor and the creditor and that there shall be no variation of the terms and conditions of the acknowledgement unless they are in writing and signed by the parties.

Definition of terms that may be found in an Acknowledgment of Debt:

Domicilium citandi et executandi

A Latin legal term meaning the address nominated by a party in a legal contract where legal notices may be sent.

Non numeratae pecuniae

A Latin legal term that means that no valuable consideration has been received. The debtor gives away their right to claim the defence that the moneys claimed by the creditor were in fact never advanced to, or received by or on behalf of the debtor.

Non causa debiti

A Latin legal term that means that there is no cause for the debt. It places the onus of proving the absence of a cause of debt on the debtor.

Errore calculi   

A Latin legal term that means that there is no calculation error. The debtor renounces their right to raise the defence that the amount claimed in the acknowledgement of debt has been incorrectly calculated by the creditor.

Revision of accounts 

A term that means a debtor cannot raise the defence that the account has been amended, the debtor paid of some of the amount owed when a creditor claims payment for the full amount in the acknowledgment of debt. This is relevant where the obligation relates to the settlement of account.

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