The high court has confirmed that a simple acknowledgement of debt is a credit agreement as envisaged in section 8(4)(f) of the National Credit Act, 2005.
But a credit provider who only enters into one such agreement does not have to register as a credit provider under the NCA even if the principal debt is more than R500 000. Section 40(1)(b) does not refer to a single lending transaction. Someone giving a once-off loan more than the threshold of R500 000 who is not intending to be a multiple lender does not need to be a registered credit provider.
The defendant signed an acknowledgement of debt in favour of the plaintiff for R1.225 million and undertook to pay the amount in full by a date one year later with interest at the prime rate paid monthly. When R620 000 was still payable the payments stopped and the defendant alleged that the agreement was void because the defendant was not a registered credit provider. The defence was rejected for reasons given above even though the acknowledgement of debt was a credit agreement for the purposes of the NCA.