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n Tydskrif vir die Suid-Afrikaanse Reg - Gedingvoering op tjeks en die aanwendingsterrein van die National Credit Act
Litigation on cheques and the field of application of the National Credit Act
At the outset, this contribution restates a number of essential common-law principles regarding litigation on cheques, especially by way of the provisional sentence procedure. It emphasises the fact that the holder of a cheque normally has a choice between litigating on the underlying relationship between the parties that gave rise to the drawing of the cheque and instituting action on the document itself. A so-called cambial contract is concluded on the cheque which is completed by signature and delivery thereof. However, the cambial relationship does not replace the underlying relationship. The two obligations are cumulative and directed at payment of the same debt. However, they give rise to two independent, alternative remedies: if the creditor elects to proceed on the document itself his right to proceed on the underlying relationship is suspended until maturity of the instrument. When litigating on a cheque by way of provisional sentence proceedings the plaintiff must make a number of essential averments in his founding affidavit, for example, that he is the holder of the cheque and that he has complied with the duty of presenting it for payment or that he is excused from doing so. The article investigates a number of decisions in which non-compliance with the notice requirements of sections 129 and 130 of the National Credit Act was raised in opposing applications for provisional sentence on cheques issued pursuant to transactions which were allegedly subject to the act. In effect the reasoning of the defendants in these cases was that by litigating on the cheques in question the plaintiffs were in fact attempting to enforce the agreements in respect of which they were given and that the plaintiffs could not proceed with such enforcement before complying with sections 129 and 130. As could be expected, the plaintiffs simply countered by arguing that they were exercising their choice to proceed on the cheques in question, not the underlying relationship, and that they therefore did not have to comply with sections 129 and 130. In this regard there were divergent decisions in different divisions of the high court. Fortunately, the supreme court of appeal recently finally settled any uncertainty in this regard by confirming not only the holder's choice of cause of action but also that an action on the cheques in cases such as these did not amount to the enforcement of the underlying transaction and that compliance with sections 129 and 30 was not required. The court also did not shy away from criticising the poor draftsmanship of the National Credit Act which has given rise to unnecessary litigation. An example of such draftsmanship is to be found in section 4(5) of the act and it is proposed that it should be scrapped.
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