NATIONAL CREDIT ACT

If you undertake to supply goods or services, and either defer the consumer's obligation to pay, or bill the consumer periodically AND charge a fee or interest in respect of any amount deferred or any amount billed and not paid within the time provided in the agreement this is a credit agreement covered by the National Credit Act (the Act) .

You may be required to register as a credit provider under the Act if you have concluded more than 100 credit agreements or the total principal debt of all your outstanding credit agreements exceeds R500 000.

If you are required to register and do not register, any credit agreements that you enter into will be unlawful and potentially void and unenforceable.
Credit agreements include pawn or discount transactions, incidental credit agreements, installment agreements, mortgage agreements, secured loans leases of movable property and any other agreements, in terms of which payment is deferred and any charge, fee or interest is payable.

Credit agreements also include agreements in terms of which a person undertakes or promises to satisfy upon demand any obligation of another consumer in terms of a credit facility or credit transaction.

Specifically excluded from the definition of a credit agreement are:

	a policy of insurance;
	a lease of immovable property; and
	a transaction between a stokvel and a member of that stokvel in terms of the rules of the stokvel.

Note that ordinary sales and/or the provision of services on credit or account are excluded from the Act if no interest or fee is charged for late payment.

The Act applies to all written credit agreements between parties dealing at arm's length and concluded within South Africa, with the following exceptions:

when the consumer is a juristic person whose asset value or annual turnover at the time that the agreement is concluded equals or exceeds R1 million. This means that credit agreements concluded with most companies, close corporations, partnerships and trusts will be excluded. (A juristic person under the Act includes a trust with more than 3 trustees, a partnership and an unincorporated association, but not a sole proprietor);

if the agreement is a large agreement (mortgage agreement or other credit agreement (except a pawn transaction or credit guarantee) for a value above R250 000) and the consumer is a juristic person whose asset value or annual turnover does not, at the time the agreement is concluded, exceed R1 million.

Existing credit providers are required to register with the NCR by 28 July 2006. Credit providers that are established after that date or that only meet the requirements for registration after that date, should register once they meet the requirements for registration.

The credit agreements referred to in the previous paragraph exclude incidental credit agreements.

An incidental credit agreement is any agreement in terms of which a charge is levied for payment of an invoice after a specific date, or where two prices are quoted to the consumer, the lesser applying if payment is made on or before a certain date, and the higher for payments thereafter. Providers of incidental credit agreements are not required to register in terms of the Act. Certain sections of the Act apply to these agreements from 20 business days after they become overdue and late payment fees or interest is levied.

Please note that the Act governs credit agreements in general although certain exclusions apply depending on the nature of the credit agreement, such as the exclusion from the registration requirements for credit providers who are only party to incidental credit agreements.