, PLEASE USE THIS DOCUMENT AS A GUIDE ONLY
QUESTION 1
(a) Advise your client in full whether the National Credit Act 34 of 2005 (the NCA) is in fact
applicable to the said agreement.
1.1 Introduction
The primary question is whether the agreement between Forever You (Pty) Ltd and Judy constitutes
a "credit agreement" as defined in the National Credit Act 34 of 2005 ("the NCA"). Section 8(1) of
the NCA provides that an agreement constitutes a credit agreement if it falls within one of three
categories: a credit facility, a credit transaction, or a credit guarantee.¹
1.2 Classification of the Agreement
The agreement between Forever You and Judy is a credit facility as defined in section 8(3) of the
NCA. A credit facility exists where:
(a) a credit provider undertakes
(i) to supply goods or services or to pay an amount or amounts, as determined by the consumer from
time to time, to the consumer or on behalf of, or at the direction of, the consumer; and
(ii) either to (aa) defer the consumer's obligation to pay any part of the cost of goods or services...
and
(b) any charge, fee or interest is payable to the credit provider in respect of
(i) any amount deferred.²
Applying this to the facts:
Element Application
Credit provider undertakes to supply
Forever You supplies clothing to Judy
goods
Consumer determines amount from time Judy has a credit limit of R5,000 and chooses what to
to time purchase
Deferral of payment Judy pays in instalments
Interest payable 20% per annum is charged on outstanding balance
The agreement therefore satisfies all requirements of a credit facility. This is further supported by the
definition in section 8(3), which expressly includes store cards and similar arrangements.³
¹ LPL4801 Study Guide 3 (University of South Africa, 2023) 40.
² LPL4801 Study Guide 3 (University of South Africa, 2023) 41-42.
³ LPL4801 Study Guide 3 (University of South Africa, 2023) 42.
QUESTION 1
(a) Advise your client in full whether the National Credit Act 34 of 2005 (the NCA) is in fact
applicable to the said agreement.
1.1 Introduction
The primary question is whether the agreement between Forever You (Pty) Ltd and Judy constitutes
a "credit agreement" as defined in the National Credit Act 34 of 2005 ("the NCA"). Section 8(1) of
the NCA provides that an agreement constitutes a credit agreement if it falls within one of three
categories: a credit facility, a credit transaction, or a credit guarantee.¹
1.2 Classification of the Agreement
The agreement between Forever You and Judy is a credit facility as defined in section 8(3) of the
NCA. A credit facility exists where:
(a) a credit provider undertakes
(i) to supply goods or services or to pay an amount or amounts, as determined by the consumer from
time to time, to the consumer or on behalf of, or at the direction of, the consumer; and
(ii) either to (aa) defer the consumer's obligation to pay any part of the cost of goods or services...
and
(b) any charge, fee or interest is payable to the credit provider in respect of
(i) any amount deferred.²
Applying this to the facts:
Element Application
Credit provider undertakes to supply
Forever You supplies clothing to Judy
goods
Consumer determines amount from time Judy has a credit limit of R5,000 and chooses what to
to time purchase
Deferral of payment Judy pays in instalments
Interest payable 20% per annum is charged on outstanding balance
The agreement therefore satisfies all requirements of a credit facility. This is further supported by the
definition in section 8(3), which expressly includes store cards and similar arrangements.³
¹ LPL4801 Study Guide 3 (University of South Africa, 2023) 40.
² LPL4801 Study Guide 3 (University of South Africa, 2023) 41-42.
³ LPL4801 Study Guide 3 (University of South Africa, 2023) 42.
