Exam (elaborations)

LPL4801 Assignment 1 Semester 2 2024 | Due 26 August 2024

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Course
Statutory Regulation regarding the Law of Sale and (LPL4801)

Institution
University Of South Africa (Unisa)

Forever You (Pty) Ltd is a well-known clothing store in South Africa. They offer store cards to customers who buy clothing on credit and are a registered credit provider in terms of the National Credit Act 34 of 2005. When customers buy clothing on credit, an interest rate of 20% per annum is charg...

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lpl4801 assignment 1 semester 2 2024

Institution
University of South Africa (Unisa)
Course
Statutory Regulation regarding the Law of Sale and (LPL4801)

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Forever You (Pty) Ltd is a well-known clothing store in South Africa. They offer store cards to
customers who buy clothing on credit and are a registered credit provider in terms of the National
Credit Act 34 of 2005. When customers buy clothing on credit, an interest rate of 20% per annum is
charged on the outstanding amount. Judy, a customer, opens an account on 1 May 2024 at Forever
You (Pty) Ltd. Based on her salary slips and the credit assessment performed by Forever You (Pty)
Ltd, she is allowed a credit limit of R5,000. On the same day, she spends R5,000 on new clothes. She
pays the first instalment on 1 June 2024, but fails to make any further payments. You are acting as
Forever You (Pty) Ltd’s legal representative. It transpires that Judy has obtained legal advice from
Kenny Y Attorneys. The attorneys have addressed a letter to your client with the following allegations:

 That the credit agreement between Forever You (Pty) Ltd and Judy is a credit facility in terms of
the National Credit Act 34 of 2005, and that the interest rate that is charged by your client is
excessive, rendering the agreement between your client and Judy null and void.
 It is further alleged that the clothing was of bad quality and that Judy is entitled to return the
clothing in terms of the Consumer Protection Act 68 of 2008.
 In the alternative, it is stated that your client entered into a reckless credit agreement with Judy,
rendering the credit agreement null and void.

A) Advise your client in full whether the National Credit Act 34 of 2005 (the NCA) is in fact
applicable to the said agreement.

Definition and Scope of Credit Agreement under NCA:
The NCA applies to all credit agreements, with specific exceptions. According to section 8 of the
NCA, a credit agreement is any agreement where payment is deferred and an interest or fee is
charged for the deferred payment. In this scenario, Judy opened an account with Forever You (Pty)
Ltd, where she was allowed a credit limit of R5,000. She utilized the entire credit limit on the same
day to purchase clothing and agreed to pay an interest rate of 20% per annum on the outstanding
amount.

Types of Credit Agreements:
The agreement between Forever You (Pty) Ltd and Judy qualifies as a "credit facility" under the
NCA. According to section 8(3) of the NCA, a credit facility includes any arrangement where a
credit provider allows a consumer to purchase goods or services on credit and defer payment, subject
to fees, interest, or other charges.

Registration as a Credit Provider:
Forever You (Pty) Ltd is a registered credit provider, as required by the NCA. This registration is
mandatory for any entity that provides credit under the scope of the NCA, ensuring that the
agreement with Judy falls within the regulatory framework of the NCA.

Conclusion:
The credit agreement between Forever You (Pty) Ltd and Judy is indeed a credit facility as defined
by the NCA. Therefore, the NCA is applicable to this agreement.

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Exam (elaborations)

LPL4801 Assignment 1 Semester 2 2024 | Due 26 August 2024

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