LCP4801
ASSIGNMENT 1
DUE DATE: 28 AUGUST 2026
, LCP4801 ASSIGNMENT 1 2026
DUE 28 AUGUST 2026
QUESTION 1
(a) Advice on the Applicability of the National Credit Act 34 of 2005 (“NCA”)
The National Credit Act 34 of 2005¹ applies fully to the agreement between Forever You
and Judy. The agreement constitutes a “credit facility” as defined in section 8(3) of the
NCA.
The NCA applies to all credit agreements concluded at arm’s length within South
Africa.² A “credit agreement” includes a credit facility, a credit transaction, or a credit
guarantee.³
Judy’s account falls squarely within the definition of a credit facility in section 8(3):
Forever You undertakes to supply goods (clothing) to Judy from time to time;⁴
Forever You defers Judy’s obligation to pay for the goods;⁵
Interest is payable on any outstanding amount.⁶
Forever You is a registered credit provider,⁷ Judy is a natural person,⁸ and the credit
limit (R5,000) falls within the ambit of the Act.⁹ Therefore, the NCA is fully applicable to
this credit facility, and the allegation that the agreement is “null and void” on this basis is
incorrect.
¹ National Credit Act 34 of 2005 (hereinafter “NCA”).
² NCA, s 4(1).
³ NCA, s 8(1).
⁴ NCA, s 8(3)(a)(i).
⁵ NCA, s 8(3)(a)(ii)(aa).
⁶ NCA, s 8(3)(b)(i).
⁷ NCA, s 40(1) – credit providers whose total principal debt exceeds the threshold must register. The
threshold is currently zero; see Government Gazette GN158 GG 39663 of 4 February 2016.
⁸ NCA, s 4(1)(a)(i) – all natural persons are protected.
⁹ The credit limit of R5,000 makes this a small agreement (s 9(3)), but the NCA still applies.
ASSIGNMENT 1
DUE DATE: 28 AUGUST 2026
, LCP4801 ASSIGNMENT 1 2026
DUE 28 AUGUST 2026
QUESTION 1
(a) Advice on the Applicability of the National Credit Act 34 of 2005 (“NCA”)
The National Credit Act 34 of 2005¹ applies fully to the agreement between Forever You
and Judy. The agreement constitutes a “credit facility” as defined in section 8(3) of the
NCA.
The NCA applies to all credit agreements concluded at arm’s length within South
Africa.² A “credit agreement” includes a credit facility, a credit transaction, or a credit
guarantee.³
Judy’s account falls squarely within the definition of a credit facility in section 8(3):
Forever You undertakes to supply goods (clothing) to Judy from time to time;⁴
Forever You defers Judy’s obligation to pay for the goods;⁵
Interest is payable on any outstanding amount.⁶
Forever You is a registered credit provider,⁷ Judy is a natural person,⁸ and the credit
limit (R5,000) falls within the ambit of the Act.⁹ Therefore, the NCA is fully applicable to
this credit facility, and the allegation that the agreement is “null and void” on this basis is
incorrect.
¹ National Credit Act 34 of 2005 (hereinafter “NCA”).
² NCA, s 4(1).
³ NCA, s 8(1).
⁴ NCA, s 8(3)(a)(i).
⁵ NCA, s 8(3)(a)(ii)(aa).
⁶ NCA, s 8(3)(b)(i).
⁷ NCA, s 40(1) – credit providers whose total principal debt exceeds the threshold must register. The
threshold is currently zero; see Government Gazette GN158 GG 39663 of 4 February 2016.
⁸ NCA, s 4(1)(a)(i) – all natural persons are protected.
⁹ The credit limit of R5,000 makes this a small agreement (s 9(3)), but the NCA still applies.
