Merc Law Notes: Theme 1-6 Flashcards (Consumer Credit, Property, Security, Sequestration, Employment, Insurance)

Vocabulary flashcards covering key terms and definitions from the lecture notes on Consumer Credit, Property, Security, Sequestration, Employment, and Insurance.

Loan for consumption

A contract where a lender gives a fungible thing to a borrower who agrees to return a thing of the same value, quality and quantity (consumption loan).

Fungible thing

A consumable thing that can easily be replaced with another of the same kind, quality, and quantity.

Return of equivalent thing

Borrower must return an equivalent thing; if the subject-matter is used up, it is a loan for consumption rather than a loan for use.

Credit transaction (NCA context)

A consumption loan that is interest-bearing and falls under the National Credit Act unless exempt; form and content must comply with the Act.

Usury Act

Originally regulated finance charges; repealed/overridden by the National Credit Act; includes the in duplum rule.

In duplum rule

Unpaid interest ceases to accrue once arrears equal the capital amount; applies only to arrears, not accumulated interest.

National Credit Act (NCA)

SA law revoking the Usury Act; aims to promote fair, transparent, accessible credit markets and consumer protection; applies to arm’s-length credit agreements.

National Credit Regulator (NCR)

Regulator enforcing the NCA; maintains registers (credit bureaux, debt counsellors) and oversees market conduct.

National Consumer Tribunal (NCT)

Tribunal adjudicating prohibited conduct under the NCA; its orders are binding and appealable to the High Court.

Credit facility

An arrangement that provides or facilitates credit, often within a credit agreement; can include a revolving or open-ended line.

Credit transaction (examples)

Installment agreements, leases, discounts, incidental credit, mortgage, secured loans, pawn; and combinations thereof.

Credit guarantee

An agreement where a third party guarantees the consumer’s obligation under a credit facility or transaction.

Incidental credit agreement

Credit arising from goods/services rendered with a fee or two prices for settlement; lower price if paid by a certain date.

Mortgage agreement

Credit secured by a mortgage bond over immovable property; registered at the deeds registry.

Secured loan

Credit agreement (not installment) where money is lent and a movable is pledged as security.

Pawn transaction

Credit where the creditor advances money and takes possession of a movable as security; can resale proceeds.

Developmental credit agreements

Special categories (e.g., educational loans, small business financing, credit unions) with specific debt limits and purposes.

Public interest agreements

Minister-declared public interest credit agreements (e.g., disaster responses) under the NCA.

Small/Intermediate/Large agreements

Categories based on principal debt/credit limits to determine application of thresholds and provisions.

Unlawful credit agreements

Credit agreements void due to factors like minor status, mental incapacity, or negative option marketing.

Unlawful provisions

Provisions that exempt liability, misrepresent terms, or otherwise breach the Act.

Small agreement form

Prescribed form containing limited essential information per s93(2) and reg 30(1).

Intermediate/large agreement form

Prescribed or compliant form for larger credit agreements as applicable.

Reckless credit trading

Credit granted without proper pre-contractual assessment; may be set aside or lead to debt restructuring under Tribunal/Court.

Pre-contractual duty to assess

Credit provider must assess consumer’s understanding of costs/risks, debt history, and means before granting credit.

Over-indebtedness

Consumer unable to satisfy obligations timeously; assessed using financial means, prospects, obligations and repayment history.

Debt review

Process by which a debt counsellor may reorganize a consumer’s debt obligations to avoid over-indebtedness.

Periodic statements of account

Regular statements of account furnished in prescribed form; usually monthly for most loans.

Statement of balance

Statement showing current balance, debits/credits, overdue amounts and due dates; periodic requests may be free little by little.

Statement of settlement

Statement indicating the amount to be settled on request, delivered within 5 days.

Right to settle debt early

Consumer may settle the full debt anytime (with possible termination/charges) and prepay installments.

Cooling-off period (long-term)

A cooling-off period allowing cancellation with a refund of premiums, subject to terms.

Harassment marketing (s75)

Prohibits forcing or pressuring consumers to enter credit agreements through harassment.

Negative option marketing (s74)

Prohibition on implying acceptance by silence or default; unlawful in natural-persons cases.

Declined marketing and auto credit limits (s60-62)

Consumers must be offered opt-out and clear reasons for refusals; pre-approved increases may be declined by the consumer.

Unsolicited visits (s75)

Credit providers cannot visit homes/workplaces to sell credit, with some developmental credit exceptions.

Misleading marketing (s76; regs 21-22)

Regulates advertising; unregistered providers may not advertise credit or goods on credit.

Right to apply for credit (s60(1))

Every adult or juristic person can apply for credit; providers may refuse on reasonable grounds.

Right not to be unfairly discriminated (s61(1))

Providers must not discriminate in credit decisions based on protected grounds; justified by risk methods.

Right to reasons for refusal of credit (s62)

Credit providers must provide reasons when refusing credit or reducing/ending existing limits.

Content of the credit agreement

Credit agreement must be in prescribed form with required content; details may be supplemented by parties.

Real rights

Rights in respect of property that are absolute and enforceable against others (e.g., ownership, mortgages, servitudes).

Movable vs immovable property

Movable vs immovable distinction affects transfer and hypothecation; accession can blur lines.

Ownership

Extensive rights to deal with a thing, including possession, use, and alienation subject to limits.

Original vs derivative ownership

Original: ownership arises without prior owner; derivative: passes from predecessor.

Delivery (in transfer of ownership)

Modes include longa manu, symbolic, brevi manu, cons titum possessorium, adornment; determines passing of ownership.

Accession

Acquisition of ownership of an object due to becoming part of another thing (e.g., fixtures, attachments).

Prescription

Acquiring ownership by open, continuous possession for 30 years (state property excluded).

Expropriation

State acquisition of private property for public use, with compensation.

Sectional Title

Plan dividing a building into sections with common property; body corporate governs rules.

Servitudes

Real rights allowing use or restriction over another’s property; personal vs praedial servitudes.

Personal servitude

A real right in favor of a person (e.g., usufruct, usus, habitation) over another’s property.

Praedial servitude

A real right benefiting the dominant tenement (e.g., iter, via, aquaeus) over servient land.

Notarial bond (special vs general)

A mortgage over movable property: special notarial bond gives strong priority; general notarial bond binds all movables with limited priority.

Pledge

Security over movable property by delivery; pledgee in possession may privately sell if debtor defaults.

Cession in securitatem debiti

Security by cession of a right; cedent retains reversion and can recover proceeds after payment.

Suretyship

Contract where a surety guarantees principal debt; accessory obligation dependent on debtor’s default.

Excussi on (benefit of excussion)

Surety may require creditor to sue principal debtor first before enforcing surety; exists only in some circumstances.

Division (co-sureties)

Co-sureties are liable for pro rata shares unless agreement states otherwise; right to divide may be limited.

Subrogation

Insurer steps into the insured’s rights to recover from a wrongdoer after indemnifying the insured.

Indemnity vs non-indemnity vs valued policy

Indemnity: pays actual loss; non-indemnity: fixed or periodic payments; valued: pays pre-agreed value.

Proximate cause

Dominant efficient cause of loss; governs insurer liability for claims.

Grace period (insurance)

Period after due date during which premium can be paid without losing coverage ( STI).

Reinstatement

Option to restore insured property or policy after a loss; insurer may choose to reinstate instead of paying out.

Cooling-off period (insurance)

Period in which policyholder may cancel and receive premium refunds (long-term policies with rules).

Proposal form

Insurance proposal is an offer; insurer issues policy upon acceptance; blanks must not be left.

Insurable interest

Must have a legitimate interest in the continued existence of the insured subject matter; basis for enforceability.

Duty of disclosure

Insured must disclose material facts; failure may render contract voidable; misrepresentation can affect claims.

Subrogation (duty to assist)

Insured must assist insurer’s action against third parties and notify about third-party payments.

Interim cover

Temporary cover while policy is being issued; usually no formalities; cover note may accompany.