Credit Documentation Checklist

By |December 9th, 2014|Credit Law|0 Comments


This is a basic checklist of the fundamental aspects that should be covered in credit documentation issued by corporates that provide credit to their customers

o    Suretyships / Payment Guarantees. Traditionally suretyships have been the most common form of security in credit transactions. They are subject to strict requirements and, surprisingly often, are found wanting. It is critical that suretyships are correctly formatted, worded and completed. There is a recent trend toward payment guarantees in place of suretyships.

o    National Credit Act Compliance. In the event that the debtor is a juristic person and it has an asset value or turnover above the threshold of R1 Million, the National Credit Act, 2005 does not apply to the transaction. It also does not apply to any related suretyship. A disclosure that either asset value or turnover exceeds the threshold is binding on the debtor.[1] Terms and conditions should also include a pivot clause that excludes any provisions of the terms and conditions that could result in the agreement being construed as a credit agreement (in relation to qualifying customers).

o    Business Rescue Provisions in Credit Application Form & Suretyship (NB). Approved business rescue plans can compromise claims and costs companies substantial amounts. To […]