n SA Mercantile Law Journal = SA Tydskrif vir Handelsreg - Should all natural persons standing surety be protected by the National Credit Act 34 of 2005?
|Article Title||Should all natural persons standing surety be protected by the National Credit Act 34 of 2005?|
|© Publisher:||Juta Law Publishing|
|Journal||SA Mercantile Law Journal = SA Tydskrif vir Handelsreg|
|Affiliations||1 University of South Africa|
|Publication Date||Jan 2012|
|Pages||298 - 322|
The National Credit Act provides full protection to natural persons who stood surety for credit agreements entered into on or after 1 June 2007 by other natural persons, stokvels, or trusts where there are only one or two individual trustees and that are governed by the Act, irrespective of the amounts involved. The Act provides limited protection to natural persons who have provided surety for small and intermediate credit agreements concluded with certain juristic persons, as defined in s 1 of the Act, whose asset value or annual turnover, together with the combined asset value or annual turnover of all related juristic persons, at the time the agreement is made is below the threshold value determined by the Minister in terms of s 7(1) of the Act (currently set at R1 million) (considered to be 'small juristic persons'). However, a natural person who stood surety for a credit agreement that constitutes a large credit agreement (eg, a mortgage agreement) in terms of which the consumer (ie, the principal debtor) is one of these small juristic persons (ie, whose asset value or annual turnover at the time the agreement is made is below R1 million) will not have any protection in terms of the National Credit Act. Nor does the Act protect a natural person who provided surety for a credit agreement concluded by a juristic person, as defined in s 1 of the Act, whose asset value or annual turnover, together with the combined asset value or annual turnover of all related juristic persons, at the time the agreement is made, is equal to or exceeds R1 million (considered to be a 'large juristic person'), since such an agreement (principal obligation) is considered to be totally exempt from the provisions of the Act.
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