STUDY UNIT 2: CHAPTER 12

Question 1

WHAT IS CREDIT?

Answer 1

Credit may be defined as the deferral of payment of money owed to a person, or a promise to deter such payment.

Question 2

GENERAL RULE:

Answer 2

the NCA applies basically to every credit agreement between parties dealing at arm’s length and made within, or having an effect within, the Republic, unless an exception applies.

Question 3

The Scope is…

Answer 3

the scope is also important to determine which legal rules will determine the legal position between the parties to the particular agreement.

Question 4

3 TYPES OF DEFINED CREDIT AGREEMENTS:

Answer 4

1. Credit Facility
2. Credit Transaction
3. Credit Guarantee

Question 5

1. CREDIT FACILITY:

Answer 5

an agreement constitutes a credit facility under section 8(3) if the credit provider undertakes to supply goods or services, or to pay an amount or amounts to the consumer “ as determined by the consumer from time to time, to the consumer or on behalf of, or at the direction of the consumer.

Question 6

REVOLVING CREDIT?

Answer 6

means that payments effected by the consumer creates new or additional credit that can be used by the consumer.

Question 7

2. CREDIT TRANSACTIONS:

Answer 7

-Pawn transaction
-Discount transaction
-Incidental credit agreement
-Instalment agreement
-Mortgage agreements
-Secured loans
-Leases
-Other agreements

Question 8

PAWN TRANSACTION:

Answer 8

is an agreement in terms of which a party advances money or grants credit to another, takes possession of the goods as security for the money advanced or credit granted.

Question 9

DISCOUNT TRANSACTION:

Answer 9

is an agreement in terms of which goods or services are to be provided to the consumer over a period of time and where a lower and higher prices is quoted for the goods or services.

Question 10

INCIDENTAL CREDIT AGREEMENT:

Answer 10

is an agreement in terms of which an account is tendered for the goods or services that have been provided for the consumer and either or both of the following conditions apply:
a. a fee, charge or interest is payable when the payment of the amount charged in terms of the account was not made on or before the determined period.
b. a lower or higher price was quoted for the settlement of the account.

Question 11

INSTALMENT AGREEMENT:

Answer 11

entails the sale of movable goods where the payment of the price or part thereof is deferred and is to be paid by means of periodic payments.

Question 12

ALTRUISTIC TYPES OF CREDIT AGREEMENTS:

Answer 12

a. Developmental credit agreement
b. Public interest credit agreement

Question 13

DEVELOPMENTAL CREDIT AGREEMENT:

Answer 13

may be entered into for certain purposes only.

Question 14

PUBLIC INTEREST CREDIT AGREEMENT:

Answer 14

has to be in the public interest.