LPL4801 Assignment 1
(ANSWERS) Semester 2 2023 -
DISTINCTION GUARANTEED
Patricia concludes a written agreement for the purchase of a free standing Jacuzzi from
Luxury Pools (Pty) Ltd on 1 June at her home. The purchase price of the Jacuzzi is R52,000
which is payable in twelve equal monthly in...
LPL4801 Assignment 1
(ANSWERS) Semester 2 2023 -
DISTINCTION GUARANTEED
Patricia concludes a written agreement for the purchase of a free standing Jacuzzi from
Luxury Pools (Pty) Ltd on 1 June at her home. The purchase price of the Jacuzzi is R52,000
which is payable in twelve equal monthly instalments. The agreement also makes provision
for Patricia to pay interest at 18% per annum to Luxury Pools (Pty) Ltd in respect of the
deferred purchase price and that ownership of the Jacuzzi shall be retained by Luxury Pools
(Pty) Ltd until Patricia satisfies all her financial obligations under the agreement. At the time
of conclusion of the contract the repo rate is 7% and the prime rate is 10.5%. The Jacuzzi is
delivered to Patricia on 2 June. Patricia approaches you for legal advice on 10 June. She
explains that although she can afford the Jacuzzi she has changed her mind and no longer
wishes to continue with the agreement. She also informs you that she paid the first
instalment on 2 June and would like to claim back this instalment. It appears that Luxury
Pools (Pty) Ltd did not do a proper credit assessment prior to the conclusion of the
agreement.
(a) Advise Patricia on whether the National Credit Act (“the NCA”) is applicable to the
agreement. (6)
(b) Advise Patricia whether Luxury Pools (Pty) Ltd has to register as a credit provider for the
purposes of the agreement above. (4)
(c) Advise Patricia whether the stated interest rate is allowed in terms of the NCA. (4)
(d) Advise Patricia on whether she has any remedies against Luxury Pools (Pty) Ltd. (4)
(e) What effect would a clause in the contract excluding the liability of Luxury Pools (Pty) Ltd
for any latent defects in the Jacuzzi have? (2)
, Patricia concludes a written agreement for the purchase of a free standing Jacuzzi from Luxury Pools
(Pty) Ltd on 1 June at her home. The purchase price of the Jacuzzi is R52,000 which is payable in
twelve equal monthly instalments. The agreement also makes provision for Patricia to pay interest at
18% per annum to Luxury Pools (Pty) Ltd in respect of the deferred purchase price and that ownership
of the Jacuzzi shall be retained by Luxury Pools (Pty) Ltd until Patricia satisfies all her financial
obligations under the agreement. At the time of conclusion of the contract the repo rate is 7% and the
prime rate is 10.5%. The Jacuzzi is delivered to Patricia on 2 June. Patricia approaches you for legal
advice on 10 June. She explains that although she can afford the Jacuzzi she has changed her mind and
no longer wishes to continue with the agreement. She also informs you that she paid the first
instalment on 2 June and would like to claim back this instalment. It appears that Luxury Pools (Pty)
Ltd did not do a proper credit assessment prior to the conclusion of the agreement.
(a) Advise Patricia on whether the National Credit Act (“the NCA”) is applicable to the agreement. (6)
The National Credit Act (NCA) regulates credit agreements in South Africa. To determine if the NCA is
applicable to Patricia's agreement with Luxury Pools (Pty) Ltd, we need to consider the following:
1. Consumer: Patricia needs to be a consumer as defined by the NCA. A consumer is a natural
person or a juristic person with an asset value or annual turnover below a certain threshold. If
Patricia is a natural person or a small juristic person, she would likely qualify as a consumer.
2. Credit Agreement: The agreement between Patricia and Luxury Pools (Pty) Ltd must meet the
definition of a credit agreement under the NCA. A credit agreement is an agreement where
credit is provided or deferred, and Patricia is required to pay interest or fees. Since Patricia is
purchasing the Jacuzzi on credit and paying interest, it is likely that the agreement qualifies as a
credit agreement.
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