The re-instatement of credit agreements under the National Credit Act 34 of 2005

Abstract

Section 129(3) and (4) of the National Credit Act 34 of 2005 contains a special consumer protection mechanism commonly referred to as the right to “reinstate” a credit agreement. The general concept is that a consumer who has defaulted on his payment obligation has the right to reinstate the agreement by getting the arrears up to date and by paying certain costs. Successful reinstatement would then prevent the credit provider from enforcing or cancelling the agreement, while any ongoing enforcement action is also overturned. This right to reinstate is not absolute and thus subsection (4) provides for a number of events after which it can no longer take place. The original wording of section 129(3) and (4) led to some confusion and even litigation that reached all the way to the Constitutional Court. The subsections were also amended in 2015 in an attempt to provide clarity. However, it is unclear whether these amendments have truly resulted in the desired clarification and legal certainty. Therefore, the purpose of this dissertation is to investigate the reinstatement mechanism in detail – starting with an historical overview of similar concepts that existed prior to the NCA. The position pre and post the 2015 amendments are then analysed in order to determine the current interpretation of these provisions, to assess whether the contradictions in the original subsections were addressed properly, and to identify any remaining problems in the present version of the subsections. A strong emphasis is on analysing case law and academic commentaries on this topic, and to ask questions regarding the future of this consumer credit mechanism.