LML4807 PORTFOLIO MEMO - MAY/JUNE 2025 - SEMESTER 1 - UNISA - DUE DATE :- 27 MAY 2025 - (DETAILED ANSWERS WITH FOOTNOTES AND BIBLIOGRAPHY - DISTINCTION GUARANTEED!)

LML4807 PORTFOLIO MEMO - MAY/JUNE 2025 - SEMESTER 1 - UNISA - DUE DATE :- 27 MAY 2025 - (DETAILED ANSWERS WITH FOOTNOTES AND BIBLIOGRAPHY - DISTINCTION GUARANTEED!) QUESTION 1 (Your answer should not exceed 2 typed pages) Answer the following questions in relation to the promotion of financial inclusion in South Africa: 1.1 Describe what is meant by “first-order retail financial services” as a government initiative to promote access to finance. Refer to examples in your answer. (5) 1.2 Differentiate between the “demand” and “supply” factors as causes of financial exclusion. Refer to examples in your answer. (10) [15] QUESTION 2 (Your answer should not exceed 2 typed pages) Read the following scenario and answer the questions that follow: Stephan, Zanele, and Frank are childhood friends from a rural village of Goedgevonden that largely comprises of poor and low-income earners. They are concerned about the lack of access to banks that provide financial products that are suitable to the community’s needs, such as basic savings accounts and microcredits. They have heard of the community in the nearby village that has established a stokvel to address this lack of financial services. Together with other members of the community, they decide to establish a stokvel. Members of the stokvel will be required to deposit a minimum amount of money for opening a bank account. A member may continue to deposit money into the stokvel’s account if he or she wants to gain more interests on the investment. Members are allowed to take a loan from the stokvel and to repay the amount monthly, with interest. They are however, concerned that their stokvel will be required to registered as a bank as its activities constitute the business of a bank. They therefore approach you for advice on the following: 2.1 Advise whether the activities of their stokvel constitute “the business of a bank” and if the stokvel is therefore required to register as a bank? (5) 2.2 Advise whether the activities of their stokvel may be exempted from registering as a bank? (5) [10] QUESTION 3 (Your answer should not exceed 2 typed pages) Answer the following questions with reference to the decision of Nedbank v Pestana 2009 (2) SA 189 (SCA), which relate to the reversal of electronic funds transfers. Your answers must not discuss the facts or the decision of the case in detail. 3.1 Identify and discuss the general principle applicable to the reversal of electronic funds transfers. (5) 3.2 Discuss examples of grounds under which a credit entry made into a bank account may validly be reversed. (5) [10] QUESTION 4 (Your answer should not exceed 2 typed pages) Explain the following concepts: 4.1 The bank’s duty of care. (6) 4.2 Depositum. (5) 4.3 Advances against fixed deposits. (4) [15] QUESTION 5 (Your answer should not exceed 5 typed pages) David is a customer of Smart Bank and he asks your legal advice regarding the following matters: 5.1 David has been invited to join a “gooi-gooi” stokvel. Explain to David what is meant by a “gooi-gooi” stokvel. (2) 5.2 The “gooi-gooi” stokvel wishes to borrow money from Smart Bank to purchase a taxi. Advise David whether the National Credit Act 34 of 2005 would apply to the loan between Smart Bank and the “gooi-gooi” stokvel. (3) 5.3 David noticed that the ATM card linked to his current account is missing and R100 was withdrawn from his account. David then immediately notified Smart Bank that his card has been stolen. Fully advise David whether he is liable for the unauthorised withdrawal from his account. (9) 5.4 Smart Bank decided to unilaterally terminate its bank-customer contract with David in terms of an express cancellation clause in their contract. Smart Bank has given David 30 days’ notice before closure of his banking accounts. David does not dispute Smart Bank’s decision to terminate their bank-customer contract, but he feels that 30 days’ notice is not enough time to be considered as “reasonable notice”. Their contract does not specify how many days notice should be given. With reference to Schulze WG “The Bank’s right to cancel the contract between it and its customer unilaterally Bredenkamp v Standard Bank of South Africa Ltd 2010 (4) SA 468 (SCA)” (2011) 32 Obiter 211, advise David whether 30 days would be regarded as ‘reasonable notice’ before Smart bank may close David’s bank accounts. (6) [20] QUESTION 6 (Your answer should not exceed 3 typed pages) 6.1 Explain the fundamental differences between a ‘stop order’ and a ‘debit order’. In your answer provide the definitions for each method of payment and the rights, if any, each method of payment creates for a creditor. (5) 6.2 Read the following facts and answer the questions that follow: College roommates, Sylvester and Kaylin visit Best Buy Supermarket, a local store in Durban to purchase their weekly groceries. Sylvester uses his ‘Best Buy Supermarket’ store credit card, while Kaylin uses his ‘National Bank credit card’ to make payments for purchases of food items. (a) Explain what ‘types’ of credit cards are used by Sylvester and Kaylin to make their payments and whether there is, if any, differences between the two types of credit cards? (4) (b) Advise who is the issuer of the credit card held by Sylvester and also advise who is the issuer of the credit card held by Kaylin? (2) (c) Advise who is the supplier of the goods that are purchased by Kaylin? (2) (d) Where, or at which stores, can Sylvester use his credit card? (2) (e) After purchasing their groceries at Best Buy Supermarket, Sylvester goes to his favourite take away outlet to grab a spicy Durban bunny chow for lunch. While having his lunch, he misplaces his wallet and loses his Best Buy Supermarket card. He immediately informs Best Buy Supermarket and instructs them to cancel all his cards. Later, Sylvester notices on his monthly invoice from Best Buy Supermarket that his card was used to purchase clothing worth R5 000 a week after he misplaced his card. Advise Sylvester whether or not he is liable for this purchase. (5) [20] QUESTION 7 (Your answer should not exceed 2 typed pages) Tarryn is a newly qualified fitness personal trainer. She establishes a small private exclusive gym in Sandton and offers her clients personal exercise lessons and professional swimming classes. Her business sees a great rise in clientele and after a year of success in building her business, she decides to buy a luxury apartment in Sandton situated near her business. She approaches ‘Red and Gold Bank’ for a mortgage loan of R2 million. Red and Gold Bank is a registered credit provider and one of the leading banks in South Africa. Red and Gold Bank undertakes the necessary credit assessments and Tarryn’s application is successful. With reference to the above set of facts, answer the following questions: 7.1 List the 3 types of credit agreements that fall within the scope of the National Credit Act. (3) 7.2 Describe what type of credit agreement Tarryn has applied for. (2) 7.3 List 3 rights a consumer, like Tarryn, is entitled to when applying for credit. (3) 7.4 Explain what the legal position would be between Tarryn and Red and Gold Bank if Red and Gold Bank is not registered as a credit provider in terms of the National Credit Act. (2) [10] TOTAL: 100