Are Acknowledgement of Debt’s subject to the provisions of the National Credit Act 34 of 2005?

Consider the following practical example: You loaned R 20 000.00 from a friend/colleague. You could not repay the loan as you initially promised due to financial difficulties. Your friend/colleague draws up an Acknowledgment of Debt (hereafter referred to as ‘AOD’) whereby the new repayment terms are clearly specified. Furthermore, he or she requests that your husband and mother bind themselves as sureties if you default on the loan repayments. Would this transaction (the loan) be considered a credit transaction in accordance with the provisions of the National Credit Act (hereinafter referred to as the ‘NCA’)? Would the fact that your husband and mother bound themselves to the Creditor be considered a credit guarantee as defined in Section 8(5) of the NCA? Would your friend/colleague be deemed to be a Credit Provider, and subsequently be required to register in accordance with the provisions of Section 40 of the NCA?

The Supreme Court of Appeal (hereafter referred to as the “SCA”) answered the above questions and provided clarity on the matter in the matter of Shaw & Another v Mackintosh & Another on the 29th of March 2018.

In this matter Mackintosh (the First Respondent) lent Mabili Search & Selection (Pty) Ltd (hereafter Mabili) an amount of R 2 million during 2009. In 2012, the parties signed an AOD wherein Mabili acknowledged its indebtedness to Mackintosh as the Creditor. Interest of R 50 00.00 per month with effect from October 2012 would be payable until the date of final payment. Should Mabili make a part payment of the capital, the interest would be pro-rated. Mackintosh obtained Default Judgment against Mabili when it defaulted on its repayments but Mabili was subsequently liquidated. Mackintosh then invoked the provisions of Clause 5 of the AOD by suing the Appellants as Sureties.

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