Friday, 20 May 2011

We get email. From a money-lender perhaps?

In April I reported on a loan shark, sorry, "micro-lender" who originally lent a victim, sorry, a "customer" P1,000 to be repaid over 2 months. After the costumer admitted that he had some problems a year went by before he could make a repayment. He was then faced with a demand for a total repayment of P10,500.

I pointed out that the LAW, specifically the in duplum rule states that at the time that a debt is settled, the interested charged may not exceed the amount that was borrowed. The lender can demand P10,500 from the victim for a P1,000 loan but no court will issue a ruling saying they have to pay that amount. The court will only require the victim to pay P2,000.

Recently I got this response:
"Good day. Let me use this medium to thank you for your effort in an attempt caring for consumers in Botswana. Importantly, I read your write up about the person who took money from a cash loan in April, 2010 and have not paid back after a year. It seems you only looked at the issue from the consumer perspective. What about the providers of loans who gave out his or her cash for long period of time. You did not consider the lender’s office rent and the salary of workers! Did you ask the debtor, the time interval before the debtor went the hospital? Am also interested in consumers’ welfare, but let’s try to balance issues between consumers and suppliers. This is because both are from households in Botswana and they buy goods and services from the same market. It is also fact that they contribute to the growth of the economy through this exchange. I want you to give it a serious thought, will be fair to pay only 2000 fro a period more than a year?"
Frankly, do I care?

Actually I DO care. I DO care that reasonable businesses are treated reasonably, but ONLY if they behave reasonably themselves. Only if they obey the law. Whether you like it or not the in duplum rule is there and it's LAW. It certainly applies to this particular case. If loan sharks can't cope with it then they shouldn't be in the moneylending business.

As Judge J Dow said in a ruling at the High Court in Lobatse in August 2008:
"The in duplum rule serves to aid debtors in financial difficulties by holding that it is unlawful to recover interest equal to or more than the capital sum upon which interest had accrued.
The rule serves an important social function by protecting debtors and providing that any clause in a contract that seeks to deprive a person of the protection afforded to them by the law is unenforceable by reason of its illegality or on the basis that it offends public policy."
So, on reflection, I'm not very sympathetic.

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