The importance of this case is that the Constitutional Court held that for loans which are “repayable on demand”, the period of extinctive prescription of three years (within which you must issue summons for a claim for repayment) begins running from the date that the loan is made, not the date that demand for repayment is made. This is very important for loans between family members and for loans between Trusts and their beneficiaries as these are often considered to be “soft loans” repayable only on demand. Should a claim be made for repayment of any such loan after a period of three years has lapsed, the borrower can defend the claim on the basis that the three year period of prescription has passed and the claim has prescribed. A proper loan agreement should therefore be drawn up for any loan agreement, even agreements between family members or between Trusts and beneficiaries.
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