Friends and money: know your rights

JOHANNESBURG SOUTH – A variety of cases are resolved by Pro Bono advocates daily, this time, the case was between friends who were in dispute over money borrowed and a vehicle given as security.

An entrepreneur who runs a small business selling repaired electrical appliances struck by lightning and purchased at hotel auctions, made a loan of R3 000 from a friend and offered his vehicle as surety.

The agreement was that the money borrowed would be returned at the end of the month, and the vehicle would be returned to its rightful owner. However, things did not happen as planned. When the plaintiff (entrepreneur) went to retrieve his vehicle and repay the loan in full at the end of the month, he found that his friend (the defendant) had already sold the vehicle without any notice.

To make matters worse, the defendant refused to divulge the amount which the vehicle was sold for.

Advocate Elizabeth Steenhuisen mediated the matter and had this counsel for people who may be having similar experiences.

Explain the rights of the entrepreneur (plaintiff) who borrowed the money and gave his personal property as surety?

“In cases where friends who borrow/lend money from/to each other, a person is free to contract as he wishes, but it results in him also being bound by his agreement. Thus, the client was obliged to pay back the money at the time as agreed, and had to give his property as surety in terms of the contract. The client was, upon fulfilment of his obligation of paying the money back, entitled to get his property back in the same condition as when he gave it as surety.

“However, the borrower, apart from his right to have the loan paid back on time, also acquired obligations, in that he had to return the object of surety to the client upon fulfilment of the contract.”

What was the role that Pro Bono played in this case?

“Pro Bono explained the rights of the client and contacted an attorney on the panel who is willing to assist with civil litigation. The attorney immediately made an appointment for the client, completed the Pro Bono Intake form and faxed it to head office. The Pro Bono consultant will follow up with the attorney and client about progress.”

What was the outcome of the case?

“No outcome yet, but it will be monitored.”

What advice would you give to a person in a similar situation (the borrowee)?

“It is always better to write down an agreement and have all parties involved, to sign it. Even better, seek legal advice before making the agreement. If you cannot afford an attorney, consult an NGO who do assist members of the public.

“If you cannot wait, search the web for examples of the type of contract you want to conclude, and either make notes or print it and create your own written and signed agreement with the information you have.

“Remember, time spent seeking advice before concluding a contract is time spent well, and even if a written contract does not guarantee problem-free situation, it will definitely diminish conflict and costs!”