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Business Law

Business Law. National Credit Act 34 of 2005. The National Credit Act: Objectives. Aims to promote fair, competitive & accessible credit and to protect consumers by: Prohibits unfair marketing Provides information to consumers System to resolve disputes Debt reorganisation

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Business Law

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  1. Business Law National Credit Act 34 of 2005

  2. The National Credit Act: Objectives • Aims to promote fair, competitive & accessible credit and to protect consumers by: • Prohibits unfair marketing • Provides information to consumers • System to resolve disputes • Debt reorganisation • Credit bureaux etc

  3. Who does it apply to? • Every credit agreement except: • Juristic persons with asset value or T/O in excess of R1 million • The State • Credit provider located outside RSA • Large Credit Agreements

  4. Types of Credit Agreements • Small Credit Agreements • Intermediate Credit Agreements • Large Credit Agreements

  5. Small Credit Agreement • A pawn transaction, credit facility or credit transaction of less than R10 000

  6. Intermediate Credit Agreement • A credit facility or credit transaction of between R10 000 and R250 000

  7. Large Credit Agreement • A mortgage agreement, credit facility or credit transaction of more than R250 000

  8. Regulation • National Credit Regulator • National Consumer Tribunal • Regulations • Register if more than 100 agreements or total exceeds R500 000 • Credit bureaux to register • Debt counsellors to register

  9. Consumer Rights • Right to apply for credit • Right to reasons for refusal • Right to information in official language • Right to plain & understandable language • Right to receive documents • Right to confidentiality

  10. Credit Marketing • No automatic agreements unless refused • No automatic credit limit increases • If comparing alternatives show costs of each

  11. Prevention of Reckless Credit • No reckless credit granting • Assess consumers understanding of risks & costs, rights & obligations, financial history & financial means • Recklessly granted credit may be set aside

  12. Debt Review • Consumer may apply to debt counsellor to be declared over indebted • Debt counsellor investigates & if over indebted makes recommendation to Magistrates Court • If not over indebted may suggest parties voluntarily agree on debt rearrangement

  13. Debt Review • If over indebted – Mag Court to receive debt counsellor recommendation and decide if to reject or to declare any agreement reckless or rearrangement of consumer obligations • If not over indebted & creditor rejects DC recommendations, DC may refer to Mag Court

  14. Unlawful Provisions • Any clause in a credit agreement that does any of the following is unlawful: • Deprives consumer of any statutory rights • Exempts CP from liability • Excludes any implied warranty • States that no warranties were made before agreement • States that goods have been received (if not) • Forfeits any money paid if default • Requires deposit of ID book, ATM card etc etc..

  15. Other protections • Consumer must advise CP of address where goods kept & of change of address • Pawn brokers must specify date on which agreement ends & must deliver goods if paid by this date • Limits on costs of credit • CP must provides statements to consumer

  16. Termination • On payment in full • By rescission within 5 days (unless at CP premises) • Early settlement • Surrender of goods • Debt enforcement by court order

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