arah damaged her car when she drove into a pillar in the parking lot of a shopping mall. XYZ Panel Beaters quoted her R10 000 to repair the car. She accepted the quotation and paid a R5000 deposit. The car was repaired and returned to Sarah, and she, despite demand for payment from attorneys for XYZ Panel Beaters, remains in default for payment of the outstanding amount. Since the outstanding amount is a liquidated amount, interest has started to accrue from the date of the letter of demand. Sarah’s failure to pay the outstanding amount has led to the attorneys instituting a claim and obtaining a default judgment against her in the district court of the Magistrate’s Court. According to the attorney’s last letter to Sarah, she now owes R11 500, which includes the judgment debt, interest on the amount as well as costs. Sarah consults with you regarding this latest letter she has received. She wants to know whether it is possible for them to claim this amount of money from her when the initial debt was only R5000.

Question

arah damaged her car when she drove into a pillar in the parking lot of a shopping mall. XYZ Panel Beaters quoted her R10 000 to repair the car. She accepted the quotation and paid a R5000 deposit. The car was repaired and returned to Sarah, and she, despite demand for payment from attorneys for XYZ Panel Beaters, remains in default for payment of the outstanding amount. Since the outstanding amount is a liquidated amount, interest has started to accrue from the date of the letter of demand. Sarah’s failure to pay the outstanding amount has led to the attorneys instituting a claim and obtaining a default judgment against her in the district court of the Magistrate’s Court. According to the attorney’s last letter to Sarah, she now owes R11 500, which includes the judgment debt, interest on the amount as well as costs. Sarah consults with you regarding this latest letter she has received. She wants to know whether it is possible for them to claim this amount of money from her when the initial debt was only R5000.
Instruction: Advise Sarah with reference to the common law rule and legislative guidelines that regulate mora interest.
Your answer must clearly discuss the common law rules and legislative rules applicable.

GPT 3.5 · Answer

According to common law, a debtor is considered to be in mora (default) when they fail to pay a debt on the due date. When a debtor is in mora, the creditor is entitled to claim mora interest, which is compensation for the delay in payment. The rate of mora interest is determined by the court and is usually higher than the usual interest rate.

In the case of Sarah, since she failed to pay the outstanding amount after receiving a letter of demand from XYZ Panel Beaters' attorneys, she is considered to be in mora. This means that the attorneys can claim mora interest on the outstanding amount in addition to the original debt.

Legislatively, the National Credit Act 34 of 2005 regulates interest rates on credit agreements. Section 101 of the Act states that the maximum interest rate that can be charged on a debt is the repo rate plus 21%, unless the credit agreement provides for a higher rate. However, this does not apply to mora interest, which is governed by common law.

Therefore, in Sarah's case, XYZ Panel Beaters' attorneys are entitled to claim the outstanding amount, as well as mora interest on the debt, as determined by the court. The total amount owed by Sarah would include the judgment debt, interest on the amount, and costs, as stated in the attorney's letter. Sarah should consider negotiating with the attorneys to settle the debt to avoid further legal action or consequences.