Abstract:
Due to the ineffectiveness of previous credit consumer legislation to deal with the demands of a complex consumer market, a need for legislative reform in this area arose in South Africa. The National Credit Act was introduced to create a single system to regulate credit and to address the shortcomings of the previous consumer credit legislation. The Act came into full force and effect on 1 June 2007. it has a wider field of application that its predecessors and offer greater protection to consumers who enter into credit agreements with credit providers. The Act applies to all credit almost all credit agreements between parties dealing at arm's length and made, or having an effect within the Republic of South Africa, subject to certain exclusions. Three main categories of credit agreements can be identified in the Act. They are credit facilities, credit transactions and credit guarantees. The second main category also has sub-categories of agreements which are also defined in the Act. It is sometimes difficult to distinguish between the different credit agreements but it remains important since different rules apply in respect of each credit agreement. In order to distinguish a credit agreement from another, it is important to look at the elements of each definition closely and to identify characteristics which are unique to that specific agreement. It is widely accepted that every credit agreement contains two essential elements. Firstly there has to be a deferral of payment by the credit provider in respect of a debt owed by the consumer and secondly the credit provider charges a fee or interest in respect of the deferred payment. It is interesting in this regard that some of the definitions in the Act do not require a fee or interest to be levied such as in the case of a mortgage agreement or a secured loan. Coincidentally, these two definitions are also problematic in the sense that they introduce concepts which are not recognised in our legal system, it will be interesting to see what our courts make of these concepts and how they will go about incorporating it into the general principles of South African law. The different agreements to which the Act applies and their irregularities will be discussed and critically analysed. Copyright
