As stipulated under Article 2472(3) of the Ethiopian Civil Code, in cases where the sum lent exceeds 500 Ethiopian birr the repayment of loan may only be proved in writing or by a confession made or an oath taken in court.
But if a creditor returns a guaranteed property to the debtor, will the fact that it was not done in court dismiss the conclusion that the debt has been paid?
The decision rendered by the Cassation bench in file No. 41571 clears this confusion.
The suit was instituted on the claim of the defendant stating that he had lent 120,000 birr to the defendant and that the defendant failed to return the loan on the due date. Hence the plaintiff asked the court to give an order for the return of his money with interest. The defendant, on his defense admitted the fact that he had borrowed the money but he also claimed to have returned the money. He claimed the fact that he had returned the guaranteed properties should be sufficient to prove that.
The First Instance Court decided on behalf of the defendant, stating that the giving back of the guarantee to the defendant shows that the loan had been paid. But the Federal High Court dismissed the decision of the lower court stating that as per Article 2472(3) of the civil code the repayment of loan in this particular case can only be proved in writing or by a confession made or by an oath taken in court. Since none of the above requirements were fulfilled here, it ordered the payment of the sum stated with interest to the plaintiff.
The Cassation bench stated that the argument presented by the High Court is in fact provided in the code. But there are certain circumstances where the law orders legal presumption to be taken and one of such cases is the interpretation of Article 2020 which stipulates that the handing over of a document of title shall raise a presumption that the debt has been discharged.
When we come to the case at hand, the plaintiff did not deny the fact that he has taken guarantee for the debt. It has also been proved in lower courts that the plaintiff has returned the properties he took as a guarantee. There cannot be any possible reason the plaintiff would return the property unless he has received the money, hence the court believed that the fact that a property taken as a guarantee has been returned, a legal presumption that the loan was paid should be taken. So, it dismissed the high courts decision and stated that the loan was paid.
Thus according to the cassation court’s ruling the payment of loan can be proved not only by writing or by oath made in court but also by the return of the guaranteed property to the debtor. In other words the return of a guaranteed property to the debtor will prove the payment of loan.
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