Prescription can extinguish a debt after a set period — usually three years for ordinary commercial claims. For businesses, this means that if you wait too long to enforce your rights, you may lose them entirely. Fortunately, the law also provides mechanisms to interrupt prescription, effectively resetting the clock. Here’s how SMEs and corporates can use these tools to protect their claims.
1. Acknowledgment of Debt
- What it is: When a debtor admits liability, either verbally or in writing, prescription is interrupted.
- Best practice: Always insist on a written acknowledgment of debt — ideally signed and dated.
- Example: A customer emails confirming they owe R500,000 and will pay in installments. This acknowledgment resets the prescription period.
- Tip: Include acknowledgment clauses in contracts, requiring debtors to confirm outstanding balances periodically.
2. Issuing Summons or Legal Process
- What it is: Serving summons or initiating court proceedings interrupts prescription.
- Best practice: Don’t wait until the last minute — issue summons well before the 3-year deadline.
- Example: A supplier files summons against a retailer for unpaid invoices. Even if the case drags on, prescription is interrupted.
- Tip: Diarise critical dates and instruct attorneys early to avoid last-minute rushes.
3. Settlement Negotiations (with Caution)
- Risk: Negotiations alone do not interrupt prescription.
- Best practice: If negotiations are ongoing, secure a written acknowledgment of debt or a formal settlement agreement.
- Example: A debtor agrees to pay but delays signing. Without acknowledgment, prescription may still run.
- Tip: Always formalise negotiations in writing to protect your claim.
4. Contractual Clauses to Manage Prescription
- Acknowledgment Clauses: Require periodic confirmation of debt.
- Tip: These clauses are especially useful in long-term supply contracts or complex commercial relationships.
5. Case Law Guidance
- Makate v Vodacom (2016): Prescription only starts when a debt is enforceable.
- Truter v Deysel (2006): Knowledge of facts, not legal conclusions, triggers prescription.
- Corporate disputes: Courts consistently uphold written acknowledgments as valid interruptions, reinforcing the importance of documentation.
Practical Checklist: Interrupting Prescription
- Obtain written acknowledgments of debt from clients.
- Diarise the 3-year prescription period for all invoices and contracts.
- Issue summons early if payment is not forthcoming.
- Use settlement agreements to formalize negotiations.
- Train staff to recognise prescription risks in debt collection.
Prescription can extinguish valuable claims, but businesses are not powerless. By using acknowledgments, issuing summons, formalising settlements, and drafting smart contract clauses, corporates can interrupt prescription and preserve their rights. Proactive management of timelines and documentation is the key to turning legal risk into strategic advantage.
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