Study Theme 9: Unlawful provisions Flashcards
s90(1) on Prohibition of
unlawful provisions
❖ A credit agreement must not contain an unlawful
provision. Unlawful provisions in a credit agreement are
thus prohibited
❖ Aim:
❖ To prevent the misuse of standard form agreements by
credit providers,
❖ Drafted to be in favor of the credit provider only and also
abolishing important consumer rights
s90(2)
❖ Example of unlawful provisions
❖ Contains a list which prohibits about 30 contractual
provisions which may not be incorporated in a credit
agreement subject to the NCA.
❖ A provision is unlawful and thus prohibited if it:
➢ Waives or deprives a consumer of right in Act
➢ Exempts credit provider from liability (or restrict
liability) for
➢ Act/omission/representation by person on behalf of
credit provider or
➢ Guarantee that would, in absence of the unlawful
provision, be implied in agreement.
➢ Credit agreements subject to the NCA may in other
words not contain any provision that will do away with
ex lege guarantees or warranties, such as the warranty
against latent defects and eviction.
❖ Acknowledgement by consumer
Before Entering an Agreement: The consumer must formally acknowledge certain terms and conditions.
Purpose: Ensures that the consumer is fully aware of what they are agreeing to, promoting informed decision-making and transparency.
No Representations or Warranties by Credit Provider
Before Agreement: The credit provider, or anyone acting on their behalf, cannot make any representations or warranties that are not part of the formal agreement.
Implication: This prevents any misleading claims or promises that might influence the consumer’s decision unfairly. Only the terms explicitly stated in the contract are enforceable.
❖ Authorisation by consumer
❖ Any person acting on behalf of credit provider to enter
premises to take goods in possession
❖ Agreement by consumer:
To esstblish an agreement by a consumer, the consumer must provide certain documents and details to the credit provider.
❖ ID document, credit / debit card, atm card, pin number
deposited with or provided to the credit provider
❖ Consequences of unlawful provisions
❖ S 90(3) of NCA
❖ S 90(4) of NCA
❖ S 164(1) of NCA
❖ Sasfin v Beukes:
❖ S 90(3) of NCA
❖ Provision void as from date it purported to take effect
❖ S 90(4) of NCA
❖ A court must:
❖ Sever unlawful provision from agreement; or
❖ Alter it to extent necessary to render it lawful (if
reasonable to do so having regard to ca as a whole); or
❖ Declare entire agreement unlawful and void where upon
the common law consequences will prevail
❖ S 164(1) of NCA
❖ Prohibited provision only unlawful if it is declared
unlawful by a court (or in future the Tribunal).
❖ Sasfin v Beukes:
❖ Dealt with the approach of the courts.
❖ A court will sever an unlawful provision from the contract
if possible and enforce the remainder of the contract.
❖ Unless severance will leave the parties with a contract
substantially different from the one, they intended.
