Sureties in terms of the National Credit Act 34 of 2005

Abstract

The purpose of this dissertation is to examine sureties in terms of the National Credit Act 34 of 2005 (hereafter "NCA"). The main research question contemplated in this dissertation is whether the full protection of the NCA should be extended to all natural persons standing surety for the debts of individuals or entities by way of entering into suretyship agreements. It further identifies problem areas within the provisions of the NCA in this regard, and ultimately aims to offer some prospective solutions thereto. Suretyship agreements are critical to credit providers in order to restrict risks when granting credit. The NCA introduces new forms of protection for consumers in South Africa, setting out the purpose of the NCA in the preamble and section 3 thereof. In view of the aims of the NCA it is submitted that the major objective of consumer credit legislation is to minimise malpractices, establish equal bargaining power between parties to a credit agreement and most importantly the protection of private individual consumers. However, not all agreements are governed by the NCA, and only certain specified credit agreements fall within the ambit of the Act. Therefore, the NCA's field of application is extremely important to consumer legislation, because it defines the extent of protection that consumers are entitled to. This dissertation investigates the definition and characteristics of a suretyship, and examine whether the definition of a suretyship is compatible with the definition of a credit guarantee in terms of the NCA. Furthermore, this dissertation investigates whether all natural person sureties are being treated equally by the law, amongst others, arguing that the present situation is unconstitutional as it unreasonably and unfairly discriminate against this group of natural person sureties in particular. Finally, two sets of conclusions are drawn together in this dissertation. Firstly, the analysis of the ordinary suretyship compared to a credit guarantee envisaged in section 8(5) of the Act. Thus, ascertaining whether a suretyship agreement is a credit agreement in terms of the NCA. Secondly, the question of whether the Act's full protection should be extended to all natural person sureties.