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n Tydskrif vir die Suid-Afrikaanse Reg - Statutêr verbode bedinge in kredietooreenkomste
Terms in credit agreements prohibited by statute
Contracts, or terms in contracts, may be unlawful on various grounds. They may be against good morals, or public policy or legislation. There is a strong interrelationship between the concepts of the boni mores and public policy, and both may play a role in legislative enactments dealing with unlawful contracts.
Legislatures world wide have strengthened the rules of the common law regarding illegal contracts. This was done in a variety of ways. Certain countries' codes made all contracts subject to the dictates of good faith or reasonableness. A later development was to prohibit certain identified terms in contracts concluded with consumers. A consumer is normally defined as a natural person who obtains goods or services other than in the course of his business or trade. The lists of prohibited terms in legislation of this nature are often referred to as "black lists" (ie lists with terms which are absolutely prohibited) and "grey lists" (ie lists with terms that are presumed to be unfair but may be proved to be reasonable in the circumstances). The concept of good faith, whilst playing an important role in the law of contract in South Africa, has not been recognised or accepted by our courts as a free standing principle that may be used to declare a contract or a term unlawful. A contract, or a provision in a contract, can only be attacked on the ground that it runs counter to public policy or good morals. Legislation dealing with specified prohibited terms in consumer contracts has, however, formed part of the South African legal landscape for quite some time. The Hire-Purchase Act 36 of 1942, for instance, prohibited certain terms in contracts covered by the act, as did its successor, the Credit Agreements Act 75 of 1980. The last-mentioned act was replaced by the National Credit Act 34 of 2005. This act builds on the previous legislation and has a black list of approximately 30 forbidden terms. In addition to this, the Consumer Protection Act 68 of 2008 was passed by parliament. At the time of writing hereof the act has not come into operation yet. This act is the first one in South Africa dealing with unfair contract terms in general (in contradistinction to specified forbidden terms contained in a list). The act, like most consumer acts in the world, has limited application, however. It does not apply to all contracts.
This article firstly provides a brief overview of the methodology used pertaining to unreasonable and illegal contract terms in certain European countries, compared with the legislative initiatives in South Africa. This is followed by an in depth analysis of the prohibitions contained in the black list in the National Credit Act in particular.
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