People enter into informal loans daily. They borrow and lend each other monies from time to time. More often, these informal loans will not be reduced to writing and will be based on mutual trust.  Usually, the debtor (borrower) will not return the money, taking advantage of the fact that the loan was not reduced in writing. The Creditor will face difficulty in claiming his or her money from the debtor because it will be difficult to prove the existence of the debt in the first place. The million-dollar question that begs for answer in debt recovery is whether or not the debtor is indebted to the Creditor in the amount claimed. All these challenges may be avoided by having a debtor sign an Acknowledgement of debt in which the Debtor acknowledges liability in a certain amount.

What is an Acknowledgement of Debt?

An acknowledgment of debt is a written document signed by a debtor acknowledging or accepting his or her indebtedness to the Creditor, the amount owing and the terms of paying the debt owed. Put differently, an acknowledgment of debt is an admission of liability and a written undertaking by a debtor to repay the amount owing. The Courts have defined an acknowledgment of debt as a clear and unequivocal written promise to pay a debt.[1]An acknowledgment of debt can be in the form of an agreement signed by both the Creditor and debtor or can be in the form of an affidavit deposed to by a debtor swearing his or her indebtedness to the Creditor. Whatever the form an acknowledgment of debt may take, it must contain the full details of the Debtor, acceptance of liability, the amount owing, terms of payment, and the interest to be levied. It may also contain other provisions like Legal Costs and Collection commission that will be due from the debtor in the event of default. Once signed, an acknowledgment of debt becomes a liquid document. It is imperative to note that, there are several types of liquid documents, but this article is focused on the Acknowledgement of debt.

Acknowledgment of debt and the Law

Where the Creditor is in possession of a Liquid Document (valid acknowledgment of debt), our law provides for curtailment of proceedings because an acknowledgment of debt is regarded as prima-facie evidence of indebtedness. Our law provides for quick remedies in cases where the Creditor holds a Liquid document. The law provides for the procedure of Provisional sentence summons and summary judgment. I will briefly explain below, how the above-stated procedures will save the Creditor’s time and money if he possesses an Acknowledgement of debt.

In the case of Maseko v Ndlovu[2], it was held that to obtain a Provisional sentence, a Plaintiff must hold a valid acknowledgement of debt, commonly known as a liquid document. What this means is that, upon breach of the Acknowledgement of debt, a creditor can approach the High Court with a provisional sentence based on the Acknowledgement of debt alone, without setting out all the material terms of how the debt has arisen, in an attempt to have the High Court judgment against the debtor which was accepted in the acknowledgement of Debt.

In a case where the Creditor has an acknowledgement of debt, he/she will have an unanswerable claim because there will be no real difficulty as to how the dispute arises unless the Defendant proves otherwise. Any defence that will be raised by a Debtor who freely executed an acknowledgement of debt will not be bonafide and will only be entered to buy time. Therefore, a Creditor is entitled to a summary judgment where it is in possession of a liquid document. In the event of a breach of an acknowledgement of the debt by the debtor, the summary judgment also affords the Creditor quick relief without the expense of going to trial. The essence of this remedy was stated in the case of Majoni v Ministry of Local Government and National Housing[3], where the court held that,

“The principles applicable in a summary judgment application have been well documented. The quintessence of this drastic remedy is that the plaintiff, whose belief is that the defence is not bonafide and entered solely for dilatory purposes, should be granted immediate relief without the expenses and delay of trial.”

CONCLUSION

To conclude, it is advisable to execute an acknowledgement of debt when extending informal loans to friends, relatives, churchmates, workmates, or any other person. This is so because it will save the Creditor’s or the Lender’s time and money in the event of breach of an Acknowledgement of debt. There are remedies specifically designed to help Litigants to obtain relief in such scenarios without the expense and delay of trial.

 REFERENCES

[1] Sibanda v Mushapaidze 2010 (1) ZLR 216(H)

[2] Maseko v Ndlovu HB 20/2016

[3] Majoni v Ministry of Local Government and National Housing 2001 (1)ZLR 143 (S)