Abstract

In South African law, a borrower’s obligation to repay a loan for consumption, which is typically a loan of money, can be secured using a myriad of common-law and statutory security rights created in favour of the lender. If, applying the pledge theory of cession in securitatem debiti, the security right takes the form of a pledge and cession in securitatem debiti of a personal right, the borrower or other security provider retains its dominium in the right. At the same time, the lender temporarily acquires and holds, for as long as the loan remains unpaid, a limited security interest therein. The lender’s right to repayment of its loan is thereby secured in that the lender can exercise its security rights if the borrower defaults on its loan repayment obligation. Complex issues regarding certain security rights available to lenders are analysed, including their purpose, function, classification, nature and operation. It is recommended that the UNCITRAL Model Law on Secured Transactions could be drawn on to streamline South Africa’s current piecemeal approach to security rights.