In December 2025, the Supreme Court of Appeal found that the bank which provided credit for the purchase of a vehicle was also the “supplier of the vehicle responsible for latent defects” entitling the purchaser to cancel the deal.

The purchaser bought a vehicle which experienced problems relating to the oil cooler and gearbox within four days of delivery. The gearbox was replaced whereafter the vehicle overheated. Two months later it was returned to the seller. Evidence revealed that the replaced gearbox was manufactured for an entirely different model of vehicle and was not suitable for the vehicle sold.

When sued for unpaid instalments by the bank credit provider, the purchaser relied on a remedy known as the actio redhibitoria. This remedy can be relied on if: The thing sold has a defect that impairs its utility or effectiveness; the defect exists at the time of the sale; the defect is latent and not visible upon inspection; the purchaser is unaware of its existence; the purchaser would not have purchased the item had they known of the defect; and the purchaser is willing and able to make restitution of the thing sold. Importantly, the buyer must act within a reasonable time after discovering the defect and return the item to the seller. The test is objective when determining whether a reasonable person in the purchaser’s position would have bought the goods had they know of the defects. Fundamental to the remedy is the cancellation of the sale and the reciprocal restoration of what was paid and delivered pursuant to the sale.

The court found that the credit provider was the supplier of the vehicle because of four clauses in the credit agreement. The supplier was defined as “the party from whom you procure the goods”. Clause 2.1 read “We sell the goods to you on the terms and conditions of this agreement”. Clause 4.1 read “We will remain the owner of the goods until you have paid all the amounts due under this agreement”. Clause 6.6 said that the motor vehicle would be registered in the credit provider’s name as titleholder and the purchaser’s name as owner. Having regard to the interpretation of the above clauses and in the context of the entire credit agreement, the court held that it was an inescapable conclusion that the credit provider wore two hats when it entered into the agreement, namely, as that of supplier and that of credit provider. In the National Credit Act, the term ‘supply’ has to mean “to supply the goods” and to provide the supplier-services related to the specified goods. Under the agreement, the bank as the owner of the vehicle, was the supplier and the credit provider.

Importantly, the court looked at sections 6 and 5(2)(d) of the Consumer Protection Act which excludes transactions that constitute credit agreements but not the goods or services that are subject to the agreement. Seeing the credit provider was the supplier of the goods, these sections did not give it protection against a claim based on the actio redhibitoria.

The credit provider was obliged to pay the buyer the full amount paid under the credit agreement.

This judgment will lead to all credit providers of goods looking at their terms and conditions to ensure that they are credit providers only and not the suppliers of the goods.

Van Niekerk v FirstRand Bank Limited [2025] ZASCA 187 (10 December 2025)