The Sunday Mail
Legal Matters with Arthur Marara
If you have ever read a legal agreement done and prepared by a lawyer it is not unusual to find some Latin terms. My advice is do not sign an agreement that you do not understand its meaning and implications.
“The Parties hereby agree and acknowledge that the contra proferentum rule shall not apply.” This clause is usually found in most serious agreements. Some people just read through it and do not actually get to understand what “contra proferentum” actually means and the implications.
The contra proferentem principle essentially states that if there is any doubt about the meaning or scope of an exclusion clause, the ambiguity should be resolved against the party seeking to rely on the exclusion clause on the basis that parties are not lightly to be taken to have intended to cut down the remedies the law provides for breach of contract, unless the contract contains clear words to that effect. In the case of exclusion clauses this means the narrower interpretation should be applied.
If you are negotiating the agreement on your own you need to insist that all the Latin words are translated to English so that you can have a clear understanding of what the agreement is saying. In this article, I am going to discuss a few Latin terms that usually appear in credit agreements. In the next one, I will then deal with some words that you have seen but do not understand what they mean.
Renunciation of
exceptions and benefits
“The Debtor hereby renounces all benefits from the legal exceptions “non causa debiti”, “non numeratae pecuniae”, “errori calculi”, “revision of accounts”, and “no value received”, the full force and effect of which renunciations it declares itself to be fully acquainted.”
I want you to look at the above statement. It is littered with a lot of Latin terminologies, but the drafters of that agreement are stating that, “the full force and effect of which renunciations it declares itself to be fully acquainted.”
That statement is really loaded because once you sign an agreement the caveat subscriptor principle applies, “signer beware”. We talked about this principle in the past articles. This principle was explained with clarity in the case of Muchabaiwa v Grab Enterprises (Pvt) Ltd 1996 (2) ZLR 691 (SC) KORSAH JA where the Court held that: “The general principle which applies to contracts, and commonly designated as caveat subscriptor, is that a party to the contract is bound by his signature, whether or not he has read or understood the contract, or the contract was signed with blank spaces later to be filled in.”
In most cases for suretyship and acknowledgements, clients are asked by bankers and financial institutions or in the ordinary course of entering into an agreement to renounce the legal exceptions non numeratae pecuniae, non causa debiti, errore calculi, revision of accounts and no value received, and to waive the benefit of excussion, division et divisionis and in certain cases that of de duobus vel pluribis reis debendi.
The tendency for most people is just to go to the dotted lines without applying their minds to the import of what they are renouncing in the first place? What you are doing in essence is you are actually renouncing the legal protection accorded by those legal exceptions. What do those exceptions mean?
This a complex area of law, but I will endeavour to simplify the meaning and legal effect of those exceptions and benefits. Once you renounce the benefits, a financial institution or a creditor is entitled in terms of the law to recover the full debt from the person who renounced these benefits. This also applies where there is a debtor and a surety and/or co-or joint debtors.
Beneficium ordinis seu excussionis et divisionis:
This means that the Creditor must first proceed against the principal debtor and only once it has exhausted its remedies against the principal debtor can it look to the surety for payment. The effect of waiving this benefit is that it entitles a creditor to claim payment from the surety without first exhausting the legal remedies against the principal debtor. The surety cannot insist that he or she be liable for more than his pro rata share of the debt.
Beneficium de duobus vel pluribus reis debendi:
This is a legal exception that is applicable in cases where there are two or more principal debtors who are liable jointly but not severally; meaning where each one is liable only for his share of the debt. In the event of the creditor claiming the full amount of the debt from one of the debtors, the debtor from whom the full amount is claimed can avail himself of this benefit and thereby avoid having to pay more than his share of the debt.
The effect of waiving this benefit by a co-debtor or surety is that it entitles the creditor to recover the full debt from such co-debtor’s surety, without first requiring payment from the other debtor or the principal debtor.
Exceptio non causa debiti
The “exceptio non causa debiti” is a legal exception at the instance of a debtor where they can argue that there is no just cause for the debt as the principal obligation does not exist. I once handled a case for a client who was tricked into signing an acknowledgment of debt yet there was no debt itself. The purported beneficiary of the debt decided to sue my client for the alleged debt. We managed to take this point, and we were successful in the prosecution of the defence. However, it must be noted in terms of the law that this exception does not prevent the debtor from denying the existence of the principal obligation, but serves to shift the burden of proof. The purpose of renouncing exception is to place the onus of proving the absence of a cause of debt on the debtor.
Exceptio errore calculi
“Errore calculi” is a Latin phrase which means error in calculation. The exceptio errore calculi is a defence which can be taken by a debtor relating to errors of calculation. The defence is entitles the debtor to a revision of accounts. The exceptio errore calculi protects a debtor’s right to insist upon the re-examination of accounts. A debtor can validly argue that the amount claimed has been incorrectly calculated.
Exceptio non numeratae pecuniae
The exceptio non numeratae pecuniae is a defence by a debtor that money has not been paid to him. The exception places the onus on the debtor to prove that money has not been paid to him and is not tantamount to an acknowledgement of debt. Consequently, the effect of the defence is that the obligation is not owing.
The position of the law however, is that the renunciation of a legal exception will not preclude such exception from being raised as a defence to anyone in the event that a dispute arises or legal proceedings are instituted. In the event, However, that an exception has been raised as a defence by any party after waiving such exception, then the onus of proving that such exception and the relevant facts relating thereto, will lie with that party.
LEGAL DISCLAIMER: The material contained in this post is set out in good faith for general guidance in the spirit of raising legal awareness on topical interests that affect most people on a daily basis. They are not meant to create an attorney-client relationship or constitute solicitation. No liability can be accepted for loss or expense incurred as a result of relying in particular circumstances on statements made in the post. Laws and regulations are complex and liable to change, and readers should check the current position with the relevant authorities before making personal arrangements.
Arthur Marara is a corporate law attorney practicing law in Harare, Zimbabwe. He is also a notary public and conveyancer. He is also passionate about labour law, commercial law, family law and promoting legal awareness and access to justice. He writes in his personal capacity. You can follow him on social media (Facebook Attorney Arthur Marara), or WhatsApp him on +263780055152 or email attorneyarthurmarara @gmail.com
