LPL4801 Assignment 1 Semester 1 2024 Detailed Solutions, References & Bibliography Unique number: 569476 Due Date: 15 March 2024 @12:00

QUESTION 1 a. (2 ANSWERS PROVIDED) The National Credit Act 34 of 20051 applies to all credit agreements. Section 8 of the NCA provides that an agreement will be a credit agreement for the purposes of the NCA, if two elements are present, namely: • some deferral of repayment or prepayment, and • there is a fee, charge, or interest imposed with respect to a deferred payment, or a discount given when prepayments are made. If these two elements are present agreement qualifies to be a “credit agreement” in terms of the NCA. Section 4 of the NCA provides that the Act applies to every “credit agreement” between parties who deal “at arm’s length” which is made within, or has an effect in South Africa, unless an exception applies. “Credit agreement” is defined in section 8 of the NCA to include: a credit facility, credit transaction, a credit guarantee or any combination of them. Furthermore, in terms of section 9 of the NCA a credit agreement can be small, medium or large, depending on the thresholds determined by regulation and the type of agreement involved: (a) A “small agreement” is any credit facility or credit transaction where the credit limit or principal debt falls at or below R15 000 and all pawn transactions, irrespective of the amount involved. (b) An “intermediate agreement” is a credit facility where the credit limit is over R15 000, or a credit transaction where the principal debt falls between R15 000 and R250 000. (c) A credit agreement is a “large agreement” if it is a credit transaction where the principal debt amounts to or exceeds R250 000. It is submitted therefore that a In terms of section 8(4) there are a number of different types of transactions, but from the facts this clearly probably constitutes ‘an instalment agreement’.2 The various elements as set out in that definition and determine whether this transaction qualifies as an instalment sale are: