The National Credit Act continues to challenge and bewilder, a lot of which goes back to it’s over-ambitious intentions which have been constructed on poor drafting and terminology thatis alien to the South African legal definitions.

Take for example the NCA’s impact on “juristic persons”. A juristic person is “a juristic conception to which legal personality is artificially attributed by either the common law or statute” (ABP 4×4 MOTOR DEALERS (PTY) LTD V IGI INSURANCE CO LTD 1999 (3) SA 924 (SCA) at p929 (6)). Our law has never defined partnerships, trusts, associations and general bodies of persons as juristic persons yet Section 1 of the NCA defines juristic person as:
“includes a partnership, association or other body of persons, corporate or unincorporated, or trust if-
(a) there are three or more individual trustees; or
(b) the trustee is itself a juristic person,
but does not include a stokvel;”

This definition is in complete conflict with the rest of our legal definitions, even if thisdefinition is limited to the NCA and its sphere of application.

It is submitted that the National Credit Act is essentially consumer protection legislation and that as such it should only apply to individual consumers and no other entities, save with regard to regulating interest and financial charges against “juristic persons”. However the NCA tries to have some of its consumer protection provisions extended to small “juristic persons”, that is those with annual income and/or assets under R 1 million. Ironically, Section 6 (d) of the NCA excludes all “juristic persons” from being protected from usurious interest rates and financial charges.

Previously, interest charged against all debtors was governed in the same manner by the Usury Act of 1968, whether such debtors were juristic or natural persons. From the 1st June 2007, the Usury Act was repealed by the NCA and the NCA in terms of Chapter 5, Part C governs financial and interest charges.

Now let us consider some of the implications of “juristic persons” being excluded from the interest provisions of the NCA.

Some legal advisors from the National Credit Regulator’s office have suggested that competition and market forces will determine the interest rates and financial charges at which “juristic persons” are charged. This laisez faire attitude is not only incongruous with the paternalistic attitude shown to small “juristic persons”
(with annual income and assets less then R 1 million) by giving various forms of protection in terms of the NCA but also does not take into account commercial realities.

For example “juristic persons” incur interest in a number of what the NCA defines as incidental credit agreements (Section 8 (4)(b)), where interest is only charged on overdue accounts. Typically the relationship between the credit provider and the “juristic person” as consumer is governed by an initial contract incorporating the credit provider’s standard terms and conditions in which there is a common clause governing interest (a typical example being “The credit provider can charge interest on any overdue amount at the maximum interest rate permissible in law”). In a large number of cases interest is only charged when the account has reached a truly delinquent state and shortly before, or when, the consumer is handed over for legal action. At this stage the relationship between the credit provider and the consumer has in all probability broken down irretrievably and the consumer certainly will not be able to rely on market and competition forces protecting them from usurious and absurdly high interest rates being charged.

It is submitted that there will be a degree of protection for juristic persons from the common law in duplum rule (as opposed to the NCA in duplum rule) and that courts may try to protect such juristic persons in terms of the Conventional Penalties Act read with Section 2 (7) of the NCA.