Page 3 of 4 FirstFirst 1234 LastLast
Results 21 to 30 of 36

Thread: Q & A's on the National Credit Act

  1. #21
    Full Member Rebel's Avatar
    Join Date
    Oct 2007
    Location
    Ruimsig Gauteng
    Posts
    55
    Thanks
    2
    Thanked 9 Times in 9 Posts
    In duplum = sec 103 (5) of the NCA

  2. #22
    Bronze Member Sieg's Avatar
    Join Date
    Oct 2006
    Location
    Durban
    Posts
    126
    Thanks
    0
    Thanked 52 Times in 30 Posts

    National Credit Act

    In Duplum

    the "in duplum" rule in law refers to interest on the debt and means that a creditor may not recover an amount in interest which exceeds the original capital amount [the maximum amount of interest recoverable is therefor limited to the same amount of the capital debt]

    For example, if the debtor original owes R100, the interest amount that can be recovered, cannot exceed R100.

    The "in duplum" rule has merely been confirmed in section 103(5) of the NCA.

    It has nothing to do with the legal costs and other recoverable amounts.

    Sieg

  3. #23
    Site Caretaker Dave A's Avatar
    Join Date
    May 2006
    Location
    Durban, South Africa
    Posts
    22,648
    Thanks
    3,304
    Thanked 2,676 Times in 2,257 Posts
    Blog Entries
    12
    Hmm. Let's run through this step by step:

    Section 103 (5) reads:
    (5) Despite any provision of the common law or a credit agreement to the contrary, the amounts contemplated in section 101(1)(b) to (g) that accrue during the time that a consumer is in default under the credit agreement may not, in aggregate, exceed the unpaid balance of the principal debt under that credit agreement as at the time that the default occurs.
    And then we look at 101(1)(b) to (g) and find:
    101. (1)A credit agreement must not require payment by the consumer of any money or other consideration, except-

    (b) an initiation fee, which-

    (i) may not exceed the prescribed amount relative to the principal debt; and

    (ii) must not be applied unless the application results in the establishment of a credit agreement with that consumer;

    (c) a service fee, which-

    (i) in the case of a credit facility, may be payable monthly, annually, on a per transaction basis or on a combination of periodic and transaction basis; or

    (ii) in any other case, may be payable monthly or annually; and

    (iii) must not exceed the prescribed amount relative to the principal debt;

    (d) interest, which-

    (i) must be expressed in percentage terms as an annual rate calculated in the prescribed manner; and

    (ii) must not exceed the applicable maximum prescribed rate determined in terms of section 105;

    (e) cost of any credit insurance provided in accordance with section 106;

    (f) default administration charges, which-

    (i) may not exceed the prescribed maximum for the category of credit agreement concerned; and

    (ii) may be imposed only if the consumer has defaulted on a payment obligation under the credit agreement, and only to the extent permitted by Part C of Chapter 6; and

    (g) collection costs, which may not exceed the prescribed maximum for the category of credit agreement concerned and may be imposed only to the extent permitted by Part C of Chapter 6.
    At this point, I'm nervous. But then we look at the Limited application of Act to incidental credit agreements:
    5. (1) Only the following provisions of this Act apply with respect to an incidental credit agreement:

    (e) Chapter 5, Part C, subject to subsection (3)(a);
    Sections 101 and 103 are both in Chapter 5, Part C, so moving onto section 5(3)(a)...
    (3) A person may only charge or recover a fee, charge or interest-

    (a) in respect of a deferred amount under an incidental credit agreement as provided for in section 101(d), (f) and (g) subject to any maximum rates of interest or fees imposed in terms of section 105;
    OK. I'm still nervous
    Am I limited to recovering only R500 of my collection costs from a client who owes me R500.00 under an incidental credit agreement?
    Last edited by Dave A; 19-Nov-08 at 02:08 PM.

  4. #24
    Full Member Rebel's Avatar
    Join Date
    Oct 2007
    Location
    Ruimsig Gauteng
    Posts
    55
    Thanks
    2
    Thanked 9 Times in 9 Posts
    I am afriad that the codification of the in duplum rule in the NCA has everything to do with the amounts that may be recoverred from a debtor.

    The amount that is owing by the debtor when he defaults - say R 100 - may never be increased by more than double - another R 100 - with any and all additions to the default amount. SO interest, costs, admin, etc - all inclusive - may never be more than another R 100 in my example.

  5. #25
    Full Member Rebel's Avatar
    Join Date
    Oct 2007
    Location
    Ruimsig Gauteng
    Posts
    55
    Thanks
    2
    Thanked 9 Times in 9 Posts
    watch out that you don't try and clasify an agreement as NCA or not by its name - rather look at the causa - a cellphone contract can be in or outside the NCA - if no interest is charged then its outside - if they charge interest then its inside - mora interst on arrears does not bring it into the NCA

  6. #26
    Site Caretaker Dave A's Avatar
    Join Date
    May 2006
    Location
    Durban, South Africa
    Posts
    22,648
    Thanks
    3,304
    Thanked 2,676 Times in 2,257 Posts
    Blog Entries
    12
    OK. So let's get this cleared up then.

    I provide a once-off service for a client. I am supposed to get paid once I have completed the service - (either immediately or within 30 days - does this affect anything?). The client fails to make the payment as arranged.

    Now what?
    Does this fall under the NCA?
    If the fee for providing the service was R500.00, am I limited to being able to recover a maximum of R500.00 of my collection costs incurred?

  7. #27
    just me duncan drennan's Avatar
    Join Date
    Jun 2006
    Location
    Cape Town
    Posts
    2,642
    Thanks
    119
    Thanked 94 Times in 77 Posts
    Quote Originally Posted by Dave A View Post
    I provide a once-off service for a client. I am supposed to get paid once I have completed the service - (either immediately or within 30 days - does this affect anything?). The client fails to make the payment as arranged.
    My understanding is that it becomes an incidental agreement when interest is charged, but maybe other charges (such as recovery fees) also push this into the realm of an incidental credit agreement.

    My reading of those sections is the same as yours - any additional charges are limited to R500.
    [SIGPIC]Engineer Simplicity[/SIGPIC]
    Turn ideas into products | The Art of Engineering blog

  8. #28
    Full Member Rebel's Avatar
    Join Date
    Oct 2007
    Location
    Ruimsig Gauteng
    Posts
    55
    Thanks
    2
    Thanked 9 Times in 9 Posts
    Yes the NCA can be applicable should the receiving company be below the thresholds set - R 1 mil yearly turnover or R 1 mil asset value

  9. #29
    Site Caretaker Dave A's Avatar
    Join Date
    May 2006
    Location
    Durban, South Africa
    Posts
    22,648
    Thanks
    3,304
    Thanked 2,676 Times in 2,257 Posts
    Blog Entries
    12
    "Can" is kinda like "may."

    Let's assume the client falls under the R1 million turnover or assets line. Here's the problem as I see it.
    You don't do a credit check on a COD customer.
    You provide the service and the client fails to pay.
    You are now limited to R500.00 for collection costs?

  10. #30
    Full Member Rebel's Avatar
    Join Date
    Oct 2007
    Location
    Ruimsig Gauteng
    Posts
    55
    Thanks
    2
    Thanked 9 Times in 9 Posts
    Quote Originally Posted by Dave A View Post
    "Can" is kinda like "may."

    Let's assume the client falls under the R1 million turnover or assets line. Here's the problem as I see it.
    You don't do a credit check on a COD customer.
    You provide the service and the client fails to pay.
    You are now limited to R500.00 for collection costs?
    Dave,

    Yes "can" is like "may" - The NCA may be applicable if the end user is a "small" business ie below thresholds. Now you drag COD orders in - they fall outside the NCA definitions of credit agreements to start with. Should you not pay the COD and then interest is added it will come back under the NCA as incidental credit. The moment it is back under the NCA the sec 103 (5) in duplum is activated. As you know "reckless" does not apply to incidental.

Page 3 of 4 FirstFirst 1234 LastLast

Similar Threads

  1. National Credit Act
    By Dave A in forum National Credit Act Forum
    Replies: 33
    Last Post: 26-Mar-19, 07:35 AM
  2. Your credit record: free annual report
    By Eugene in forum National Credit Act Forum
    Replies: 27
    Last Post: 08-Nov-10, 12:32 PM
  3. National Credit Act practical implementation
    By Dave A in forum National Credit Act Forum
    Replies: 34
    Last Post: 21-Oct-10, 07:19 AM
  4. Credit Act's impact on home loans
    By Eugene in forum National Credit Act Forum
    Replies: 14
    Last Post: 15-Jul-07, 03:05 PM
  5. Credit act could be good for those who have been blacklisted
    By Eugene in forum National Credit Act Forum
    Replies: 1
    Last Post: 25-May-07, 05:22 PM

Did you like this article? Share it with your favourite social network.

Did you like this article? Share it with your favourite social network.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •