The enforcement of credit agreements through set-off: Evaluating the impact of the National Credit Act 34 of 2005

Authors Sanmarie van Deventer

ISSN: 1996-2177
Affiliations: Stellenbosch University
Source: South African Law Journal, Volume 134 Issue 2, 2017, p. 415 – 440


This article examines the impact of ss 90(2)(n) and 124 of the National Credit Act 34 of 2005 (‘NCA’) on the common-law right of credit providers to invoke set-off. It focuses on the interpretation of these sections and considers whether, and if so, to what extent, a limitation on a credit provider’s right to invoke set-off is desirable. An analysis of the policy documents prepared during the drafting of the NCA indicates that insufficient consideration was given to the consequences of limiting a credit provider’s right to set-off. It is concluded that ss 90 (2)(n) and 124 of the NCA are unclear and lead to an outcome which either completely excludes a credit provider’s common-law right to set-off, or creates an anomalous situation where a credit provider must refrain from stipulating such a right in the credit agreement in order to retain it. After a brief investigation of the provisions regarding set-off contained in consumer legislation of other jurisdictions, it is argued that, although certain limitations of a credit provider’s right to invoke set-off are justified, the conditions set by the NCA are too stringent. Legislative reforms are suggested to clarify and improve the protection granted by the NCA.