Consumer protection now debtor protection? Acknowledgments of debt and the National Credit Act

In Carter Trading (Pty) Ltd v Blignaut 2010 (2) SA 46 (ECP) the Eastern Cape High Court in Port Elizabeth concluded that an acknowledgment of debt (AOD) falls within the ambit of s 8 of the National Credit Act 34 of 2005 (NCA) and therefore constitutes a credit agreement as envisaged by the Act.

This article focuses on whether this interpretation and application of the provisions of the NCA to an AOD give effect to the purposes of the Act as required in s 2 of the NCA.

Section 2(1) of the NCA requires that the Act must be interpreted in a manner that gives effect to the purposes of the Act as set out in s 3.

Section 3 provides that the purposes of the Act are to promote and advance the social and economic welfare of South Africans; to promote a fair, transparent, competitive, sustainable, responsible, efficient, effective and accessible credit market and industry; and, in essence, to protect consumers of credit.

The court in the Carter Trading case, after applying s 8(4)(f) of the NCA to the terms of the AOD in question, concluded that, as an AOD is an agreement in terms of which payment is deferred and, at least, a fee or charge is payable, an AOD is ‘exactly what is envisaged’ in s 8(4)(f) of the NCA to be a credit agreement.

Read the full article at www.derebus.org.za/nxt/gateway.dll