Legal Articles and Guides

Pyramid schemes are in the news again. They are easy to fall for, with not only desperate pensioners and low-wage earners but also Captains of Industry and many otherwise-savvy investors regularly tricked into "investing" in them. The reason of course is that the con artists behind these schemes are adept at hiding their true nature, coming up like clockwork with ever more creative cover stories to lure the unwary.

At some point in one's life you are requested to provide certain FICA documentation, normally to your bank or to a conveyancing attorney as part of a property transaction. There is a lot of uncertainty regarding what documents are needed, especially when it comes to FICA documents for a minor, a non-resident individual, an estate late, a trust, a company, a non-resident company, a close corporation, a partnership, or an unincorporated entity.

If you are a bank (or other lender), or if you have borrowed money against your property and are facing financial difficulty, you need to know about a recent High Court decision declaring that a bank's loans to a farming couple had been granted "recklessly", setting aside the loans, and cancelling the mortgage bonds.

What is said below does not pertain to those property sales where the very robust buyer protections in the CPA (Consumer Protection Act) apply. Generally speaking the CPA applies only where the seller is selling "in the ordinary course of business" (a property developer for example), and most private sales will fall outside of the ambit of the CPA. That whole question is however a big topic on its own which we will deal with in a future article.

The Consumer Protection Act No. 68 of 2008 ('the CPA') has been hailed as the end of the voetstoots clause in sale agreements as we know it. While the provisions giving rise to the consumer protection bodies and those authorising the creation of regulations came into effect on the 24th April 2010, the remaining provisions, which apply to most businesses only came into effect on the 1st April 2011, this date being called the 'effective date' of the CPA. As such, the CPA is now the cornerstone of consumer rights in South Africa.

The implementation of the National Credit Act has drawn a lot of attention from credit providers and the Act is often blamed for the weak market conditions in retail, motor vehicle sales and the residential property market. The Acts application is far reaching. Implementing the new National Credit Act has also been a cumbersome and expensive exercise for many.

In terms of the new Consumer Protection 68 of 2008 (the Act), an agreement that is stipulated to endure for a particular amount of time is called a 'fixed term agreement', and the agreement therefore is regulated by the provisions of the Act. Are there examples of a fixed term agreement? The easiest example of a fixed term agreement is a cellphone contract. Most cellphone contracts are taken out for a period of 2 years (24 months), and as such they are fixed term agreements.