Acknowledgement of Debt

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Contents
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  • 1 Acknowledgement of Debt
    o 1.1 What is an Acknowledgement of Debt?
    o 1.2 Why does it exist?
    o 1.3 What do I do about it?
    o 1.4 The way an AoD works
    o 1.5 Download this acknowledgement of debt

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Acknowledgement of Debt
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What is an Acknowledgement of Debt?

An Acknowledgement of Debt is confirmation by a debtor (the person who owes money) to a creditor (the person who is owed money) of an outstanding debt for a fixed amount owing to that creditor.
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Why does it exist?

The AoD gives a creditor a piece of paper on which it can immediately get judgment. Without that AoD, the creditor will have a lot more of a challenge to get a judgment. All that happens is that you strengthen their hand immeasurably. You may also pick up personal responsibility for a business debt.
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What do I do about it?

If you’ve been presented with an AoD, don’t sign it. Visit the MD of the company and negotiate to settle the debt, if one exists, by making regular payments.

If this is a new supplier and they want you to sign an AoD before you deal with them, find a new supplier. Alternatively, use equity on your credit card to buy goods, and make sure you take advantage of the 55 days interest free you’re given in which to pay the credit card company.
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The way an AoD works

You’re the Hero, running a business. Imagine if you were owed money and there was a chance of being paid because a friend of yours, who happens to be an attorney, said one Sunday over a braai: "Hey, no problem, fax me the guy's info and I'll send him a letter. Won't cost you anything and he may get scared into paying."

The guy owes you the money and you've got nothing to lose so you figure it's a good idea. Why not? I reckon an awful lot of letters like that go out. Much of what we receive that appears legally terrifying is actually toothless or, at worst, a lot less bad than it appears.

Remember that the law and the courts operate a game of strategy which has a lot less to do with right and wrong and a lot more to do with who plays the better game. Who can convince the players and the judge that theirs is the more likely story.

In a legal action, neither side for one moment imagines that they are there to discover The Truth. Hell no! Each side is there to WIN! The truth, whatever it may be, is incidental to the proceedings and we would all do well to remember that. The system is not "fair" per se. Sad but true.

The one problem with it though is that our initial response often gets us into trouble. Take this example:

You owe me R10k. For whatever reason, five years has elapsed without any communication between us. Legally, as far as I know, that debt is dead and gone and I no longer have any claim to payment. The debt has proscribed.

However, I get smart and I get my attorney to send you a frighteningly worded letter demanding that you pay it all immediately, or else.

When you respond, partly in fear and partly in anger, my attorney does a nice little act and plays a bit of a game making it look like I might consider letting you pay me back at R100.00 a month. Feeling hugely relieved, and realising that it's probably never going to go anywhere anyway, you agree to this scheme.

BAM!

Suddenly the R10k debt, which had actually proscribed, and to which I, in fact, had no claim at all, is reactivated with a new starting date of today! Now, suddenly, you owe me the R10k again and it is a current debt and not a proscribed one.

Gotcha!

And, this is one of the more obvious ploys. There are other less obvious ones that we can fall into even more easily. It is for reasons like this that people like Peter Carruthers (may his name be revered) bang on that well worn drum about always contacting your own attorney before doing or saying anything at all. Yes, it costs money, but it usually saves a $#!+ load more.

This article was submitted by Tim Jackson at Micro Delta. Contact him at mailto:tim@microdelta.co.za
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Download this acknowledgement of debt

There are very simple AoDs available on line, and then there are comprehensive ones, such as the example below. You can copy and paste this into Word, fill in the blanks as you need to and print two copies, one for you and one for the debtor. Make sure that all unsigned pages are initialled. Using a black pen to sign with is the norm, it ensures that signatures show up clearly on copies.

ACKNOWLEDGEMENT OF DEBT

between

………………………………………….

(“the Debtor")

and

…………………………………………

(“the Creditor")

The Debtor hereby acknowledges itself/himself to be truly and lawfully indebted to the Creditor in the sum of R……………………………. (hereinafter referred to as “the capital sum”), being in respect of monies loaned and advanced between creditor and debtor.

The Debtor acknowledges that the further terms and conditions set out below regulate and govern the liquidation and repayment of all and any monies due, owing and payable to the Creditor (and/or its attorneys) arising out of the Debtor's indebtedness to the Creditor.

The Debtor shall repay the capital sum as set out in Annexure A.

Failure to make payment of any instalment, or to adhere to the terms in Annexure A on due date shall cause the full balance still owing (being the balance owing on the capital sum) to become immediately due and payable without the necessity of having to give the Debtor notice thereof; with interest a tempora more @ ….. % per annum.

The Debtor may, from time to time, make payment in discharge of or on account of the capital sum.

Should the Debtor

a) default in any payment or performance in terms of Annexure A hereof, and/or

b) default in any of his obligations in terms hereof, and/or

c) allow a judgment to be taken against it, and allow same to remain unsatisfied for a period of seven (7) days thereafter, and/or

d) attempt to sell, alienate, hypothecate, mortgage or pledge any of its assets without the prior written consent of the Creditor, save and except in the ordinary course of business, and/or

e) cause or allow a situation to arise wherein the Creditor, in its sole discretion, considers its position as Creditor in any way prejudiced or threatened, either now or at any time in the future,

then, and in any such event, the Creditor shall be entitled to claim immediate payment of the amounts due and payable hereunder, without prejudice to any other rights which it may have at law and which rights are strictly reserved, notwithstanding that the time of claiming payment would not yet have fallen due.

The Debtor hereby renounces the benefits of the legal exceptions stated more fully hereunder, the full force, meaning and effect of which it declares itself to be fully acquainted:

non causa debiti - by renouncing this benefit, the Debtor is precluded from raising the defence that no consideration has passed between the Creditor and the Debtor;

non numeratae pecuniae - by renouncing this benefit, the Debtor is precluded from raising the defence that no money or the equivalent thereof has passed between the Creditor and the Debtor;

errore calculi - by renouncing this benefit, the Debtor is precluded from raising the defence that there have been errors in calculation upon which the claim is based;

revision of accounts - by renouncing this benefit, the Debtor is precluded from raising the defence that the accounting documents upon which the Creditor's claim is based should be revised.

The Debtor chooses as its domicilium citandi et executandi for all purposes of this Acknowledgement of Debt, including the giving of any notice and/or the service of any process:

…………………………………………………………………………………………………..

…………………………………………………………………………………………………..

…………………………………………………………………………………………………..

(INSERT FULL PHYSICAL ADDRESS)

Either of the parties hereto shall be entitled to change their domicilium citandi et executandi to any address in the Republic of South Africa, provided that any notice of a change of such an address shall be given in writing, and shall be delivered or sent by prepaid registered post, or by hand by the one party to the other, in which case such changed address shall serve as such domicilium citandi et executandi of the party who has given such notice.

Any notice or process addressed by either party to the other shall be deemed to have been received by the addressee thereof:

a) on the date of delivery thereof if delivered by hand to the addressee; or

b) seven (7) days after the date of posting thereof (including the date of posting) if posted by prepaid registered post.

Without derogating from the aforegoing, a notice actually received by a party shall constitute proper delivery, even if not delivered in terms of the aforegoing.

For the purposes of all or any proceedings herein, the parties hereby consent to the jurisdiction of the Magistrate's Court otherwise having jurisdiction under Section 28 of the Magistrate's Court Act of 1944, as amended; notwithstanding that such proceedings are otherwise beyond the jurisdiction, this clause shall be deemed to constitute the required written consent conferring jurisdiction upon the said Court pursuant to Section 45 of the Magistrate's Court Act of 1944, as amended.

Any indulgence or extension of time granted to the Debtor by the Creditor in relation to any breach or default by the Debtor in terms hereof shall not be deemed to constitute a waiver of any of these rights granted under this Acknowledgement of Debt, and any indulgence which may be shown the Debtor under this Acknowledgement of Debt in respect of the payment of any monies hereunder, shall in no manner prejudice in any way the Creditor's rights to insist thereafter on the strict fulfilment of the Debtor's obligations under this Acknowledgement of Debt.

If the Creditor shall be obliged to institute any proceedings against the Debtor in order to recover any amount due by the Debtor to the Creditor arising out of this Acknowledgement of Debt, the Creditor shall be entitled to recover from the Debtor all fees, expenses and disbursements charged by the attorneys instructed by the Creditor to act for him on the scale applicable to charges which an attorney may charge against the attorney and his own client, including any collection commission and interest at the prevailing rate then applicable.

A certificate as to the amount owing and that same is due and payable, given by a director of the Creditor, or given by any professional practising accountant who is engaged by the Creditor in keeping, maintaining and recording the financial affairs of the Creditor, shall be presumed to be correct.

In any clause in this agreement, the masculine gender shall equally apply to the feminine gender and vice versa. As far as juristic persons are referred to herein, the masculine gender shall be applicable to such juristic person.

In any clause in this agreement the singular shall apply to the plural and vice versa.

The parties hereto acknowledge and confirm that all the information contained herein is true and correct and that no misrepresentations have been made.

THUS DONE AND SIGNED BY THE DEBTOR AT …………………………… ON …………………………………………….

…………………………………………….

(INSERT FULL NAME OF DEBTOR)

AS WITNESSES:

1 ……………………………………………….

2 ……………………………………………….

THUS DONE AND SIGNED BY THE CREDITOR AT …………………………….. ON ……………………………………………

………………………………………

(INSERT FULL NAME OF CREDITOR)

AS WITNESSES:

1 ……………………………………………….

2 ……………………………………………….

ANNEXURE A

1. The debtor is loaned and advanced the sum of ………………………………..

2. The debtor will repay same in equal monthly instalments of …………………. at ………… % interest per annum .


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