Study Theme 8: The form and content of credit agreements

Question 1

Meaning of form

Answer 1

❖ S8 definitions of credit agreements use the words: “An
agreement, irrespective of its form is valid”.
❖ Form does not mean “formalities” but what is prescribed
in the NCA.
❖ And the Regulations prescribe that form is “a framework
for the minimum contents of the credit agreement”.

Question 2

Minimum contents
of credit agreements:
❖ Small credit agreements

Answer 2

❖ S93(2) of the NCA
❖ A document that records a small credit agreement must
be in the prescribed form

❖ Regulation 30:
❖ Prescribed form for small agreements:
❖ A document that records a small credit agreement must
contain all the information as reflected in Form 20.2

**❖ Form 20.2 information: **
❖ The parties’ personal details, the financial details of the
particular credit agreement and “certain of the
consumer’s statutory rights and duties”

Question 3

❖ Intermediate and large credit agreements

Answer 3

• S93(3) of the NCA
• Regulation 31(2)
• The effect of S93(2) and (3) read with the regulations (and Form 20.2):

Question 4

S93(3) of the NCA

Answer 4

❖ A document that records an intermediate or large credit
agreement must comply with any prescribed
requirements

Question 5

Regulation 31(2)

Answer 5

❖ Intermediate and large agreements must contain the
following information…
➢ The parties’ personal details,
➢ The financial details of the particular credit
agreement and “certain of the consumer’s statutory
rights and duties”

Question 6

❖ The effect of S93(2) and (3) read with the regulations
(and Form 20.2):

Answer 6

❖ The minimum content is prescribed for credit agreements
that are subject to the NCA
❖ with the aim to disclose information in the contract to the
consumer.
❖ However, the parties can agree on more terms.

Question 7

❖ The S81 compulsory assessment:

Answer 7

❖ The credit provider must ensure that the consumer
understands the credit agreement before entering into
the credit agreement with the consumer
❖ No sanctions are provided for non-compliance with the
aforementioned provisions in the NCA and regulations
but the NCR will enforce the Act in terms of S55
compliance notices.

Question 8

❖ Purpose of formalities:

Answer 8

❖ The external or visible form of agreements (such as
writing and signature) is to protect the consumer against
uncertainty, disputes and fraud.
❖ The NCA does not pertinently require formalities, e.g.
writing and signature
❖ However, Form 20.2, in the case of small credit
agreements provides for the parties’ signature
❖ But in terms of S93(1) the credit provider must provide the
consumer with a copy of their credit agreement
(electronically or in paper format

Question 9

❖ Implication of formalities

Answer 9

❖ Even if contract is concluded orally, it must be reduced to
writing to comply with the provisions of S93
❖ The NCA could have contained specific formality
requirements.

Question 10

❖ Molamuagae case

Answer 10

❖ The court held that the NCA does not provide for the form
that the signature to an instalment sale agreement needs
to take.
❖ Such an agreement could be signed electronically, and it
would constitute a valid agreement in compliance with
the Electronic Communications and Transactions Act 25
of 2002

Question 11

❖ Lewis Stores (Pty) Ltd case

Answer 11

❖ The SCA remarked that the written document constitutes
evidence of the agreement concluded and is “not a
constitutive requirement for the validity of the contract”