Summary
Summary CML2010S Exam Notes: Credit Agency
- Course
- Institution
Summary of textbook with lecture notes incorperated into summary Textbook D Collier-Reed and K Lehmann (eds) Basic Principles of Business Law (2nd ed; 2010)
[Show more]
1 review
By: majoladoctor • 5 year ago
Seller
Follow
byrondevin
Reviews received
Content preview
1Section 2: Credit Agreements
, 2
Introduction
National Credit Act 34 of 2005 (NCA)
What it does
• Regulates credit agreements
Purpose
To promote & advance welfare
Social & economic
Of South African people
To create a better credit market & industry
By making it more
o Fair
o Transparent
o Competitive
o Sustainable
o Responsible
o Efficien
o Effective
o Accessible
To protect consumers from
The imbalance of bargaining power
Greed
Ignorance
Exploitative practices
Etc.
What is a credit agreement?
Credit extended either by
One party advancing money either
o To another party
o At the direction of another party
Parties agree that payment
o Of money owed by one party to the other
o Will be deferred to future date
Cost to debtor for advancement of money/deferral of payment either
In the form of
o Interest
o Charges
o Fees
o Combination of these
In the form of
o A lesser amount being payable
o This is in case of early payment
o Called a discount transaction
, 3
Consumers & Credit Providers
Credit providers
Definition
Party who
o Advances money/extends credit to another
o In terms of a credit agreement
Types of Credit providers
The Party who
o Supplies goods or services under a
Discount transaction
Incidental credit agreement
Installment agreement
o Advances money
Under a pawn transaction
o Extends credit either
Under a credit agreement
Under a any other credit agreement
The mortgagee
o Under a mortgage agreement
The lender
o Under a secured loan
The lessor
o Under a lease
The party to whom
o An assurance or promise is made
o Under a credit agreement
, 4
Consumers
Definition
Party to whom
o Credit is extended
In terms of a credit agreement
o Money is advanced
In terms of a credit agreement
Types of Credit providers
The party to whom
o Goods or services are sold
Under a
Discount transaction
Incidental credit agreement
Installment agreement
o Money is lent
Under a pawn transaction
o Credit is granted
Under a credit facility
The mortgager
o Under a mortgage agreement
The borrower
o Under a secured loan
The lessee
o Under a lease
The grantor
o Under any other credit agreement
, 5
Scope of application of NCA
General application
Applies to credit agreements
But only certain credit agreements
Depends on
o Type of contract
o Size of contract
o Place of conclusion and effect
Must take place in SA
o Parties to contract
o Purpose of contract
Only sometimes
What is a credit agreement?
Credit extended either by
One party advancing money either
o To another party
o At the direction of another party
Parties agree that payment
o Of money owed by one party to the other
o Will be deferred to future date
Cost to debtor for advancement of money/deferral of payment either
In the form of
o Interest
o Charges
o Fees
o Combination of these
In the form of
o A lesser amount being payable
o This is in case of early payment
o Called a discount transaction
, 6
Types of Credit Agreements
General
NCA applies to
Credit facilities
o Example = credit card
Credit transactions
o Example = instalment sale agreement
Credit guarantees
Combination of the above
How it applies
Applicable in different ways
Applicable to varying degrees to each of the above
Credit facilities
Agreement in terms of which
A credit provider (CP) undertakes to either
o Supply goods/services
o Pays amount
To a Consumer
Provides an assurance that
o The credit provider will pay
o If the consumer chooses to buy
Method of repayment
Defers payment to future date
o All or part of money owed
Bills consumer periodically for repayment
Charges consumer interest and fees
o For deferred payment/amounts not paid
Examples
Credit cards
Bank loans
Store accounts
, 7
Credit transactions
Pawn transactions
Credit Povider (CP) gives money
In exchange for goods
o Goods act as security
Discount transactions
Goods/services provided over period of time
Discounted price payable
o If debt repaid early
Incidental credit agreements
Account rendered for goods/services
o Bill sent
o States when payment must be made
If not paid by stated date either
o Interest/charges becomes payable
o 2 prices depending on date of payment
Different amount due depending on when the bill is paid
Example
R100 in august
R200 in september
Instalment agreements
Deals with sale of moveable property
o Therfore not a house
Delivery takes place
Price then payable in instalments
o With interest/fees charged
Ownership
o Remains vested in cp until paid in full
o Reverts to cp in case of default
Example
o Buy a car on higher purchase agreement
o The dealership retains ownership until the amount is paid in full
o Failure to pay
Ownership reverts to the cp
You lose ownership to the party that is giving you the
money
Leases
Movable goods lent to consumer
o rent payable either
in instalments
at later date
o interest and/or fees also payable
Ownership
o passes to consumer on settlement of debt
, 8
Overlaps with instalment sale agreements
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller byrondevin. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $4.57. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
66579 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now