NATIONAL CREDIT ACT
CHAPTER 12
INTRODUCTION
Þ Enables customers who cannot/choose not to pay in cash for products/services to have
the use of such product, prior to their having paid for it.
Þ These contracts (mainly due to unequal bargaining power between the consumer and
the credit grantor) = may easily be misused in order to exploit he consumer
* E.g. Too high finance charges, misuse of remedies
Þ Extending of credit themselves may also create problems for consumer,
* E.g. Such over-indebtedness.
* Therefore, consumer needs to be protected, not only against dishonest credit
granters, but also his/her own bad judgement.
HISTORICAL BACKGROUND
Þ Approved on 10 March 2006
Þ Came into operation gradually
Þ Abolished the Credit Agreement Act and the Usury Act
Þ However, Contracts for the purchase of land on instalments are still primarily regulated by
Alienation of Land Act
, PARTIES
Þ Known as the credit provider and the consumer
Þ Credit provider is the party who supplies goods/services/advances money, etc.
Þ Consumer is the party whom the goods or services are sold to.
FIELD OF APPLICATION OF NCA
DEFINED TRANSACTIONS
Þ NCA Applies to basically every credit agreement between parties dealing at arm’s
length
At arm’s length?
Þ Act applies irrespective of whether the credit provider:
a) is an organ of state
The description of an agreement made b) an entity controlled by an organ of state (except Reserve Bank)
by two parties freely and
independently of each other, and Þ the Act applies to an agreement if it is a: Credit facility
without some special relationship, - entail revolving credit
a) credit facility (e.g. Credit Card)
such as being a relative, having - - consumer becomes
b) credit transaction
another deal on the side or one party the owner of the
c) credit guarantee goods immediately
having complete control of the other
d) or a combination thereof. upon delivery thereof
Þ The following agreements constitute credit transactions:
* Pawn Transactions:
§ When a party advances money/grants credit to another & takes possession of
goods as security
§ If the resale value of the good is lower than the amount of the loan – a fee or
interest is imposed
§ If the period of the credit expires the party who took possession is entitled to
sell the goods and retain proceeds of the sale
2
CHAPTER 12
INTRODUCTION
Þ Enables customers who cannot/choose not to pay in cash for products/services to have
the use of such product, prior to their having paid for it.
Þ These contracts (mainly due to unequal bargaining power between the consumer and
the credit grantor) = may easily be misused in order to exploit he consumer
* E.g. Too high finance charges, misuse of remedies
Þ Extending of credit themselves may also create problems for consumer,
* E.g. Such over-indebtedness.
* Therefore, consumer needs to be protected, not only against dishonest credit
granters, but also his/her own bad judgement.
HISTORICAL BACKGROUND
Þ Approved on 10 March 2006
Þ Came into operation gradually
Þ Abolished the Credit Agreement Act and the Usury Act
Þ However, Contracts for the purchase of land on instalments are still primarily regulated by
Alienation of Land Act
, PARTIES
Þ Known as the credit provider and the consumer
Þ Credit provider is the party who supplies goods/services/advances money, etc.
Þ Consumer is the party whom the goods or services are sold to.
FIELD OF APPLICATION OF NCA
DEFINED TRANSACTIONS
Þ NCA Applies to basically every credit agreement between parties dealing at arm’s
length
At arm’s length?
Þ Act applies irrespective of whether the credit provider:
a) is an organ of state
The description of an agreement made b) an entity controlled by an organ of state (except Reserve Bank)
by two parties freely and
independently of each other, and Þ the Act applies to an agreement if it is a: Credit facility
without some special relationship, - entail revolving credit
a) credit facility (e.g. Credit Card)
such as being a relative, having - - consumer becomes
b) credit transaction
another deal on the side or one party the owner of the
c) credit guarantee goods immediately
having complete control of the other
d) or a combination thereof. upon delivery thereof
Þ The following agreements constitute credit transactions:
* Pawn Transactions:
§ When a party advances money/grants credit to another & takes possession of
goods as security
§ If the resale value of the good is lower than the amount of the loan – a fee or
interest is imposed
§ If the period of the credit expires the party who took possession is entitled to
sell the goods and retain proceeds of the sale
2
