Critical analysis of the adequacy of the Credit Agreements Act 75 of 1980 in protecting the rights of Consumers in Namibia

Abstract

Abstract provided by author

Consumer's rights are frequently undermined by the inclusion of complex and compromising clauses into contracts and credit providers often try to reduce the consumer's common law rights through certain contractual clauses. The question we need to ask ourselves is whether credit agreements are transparent and understandable to our consumers? Do they, when signing the "agreement", know exactly what they are getting themselves into or are they just too eager to receive the goods or services that they don't really pay attention to the finer details of the so-called contract they have just signed

The major area of concern is that in most cases consumers do not even attempt to read credit contracts before signing it, as their eagerness to obtain the goods or services overrides their concerns about the terms and conditions included in such agreements.[1] Or could it be that when we apply for goods or services which we wish to receive on credit we are often intimidated by the use of legal jargon in these contracts that even though we are uncertain of some and often most of the terms used in these contracts we don't care to ask for them to be explained to us? Many consumers often fall prey to unfair or unreasonable terms and clauses inserted into credit agreements which often have detrimental effects on them as consumers

Examples hereof would be the insertion of forfeiture clauses in terms of which the buyer or credit receiver agrees that the seller, in the case of a breach of contract, would have the right to immediately cancel the contract and retain the instalments paid, and furthermore repossess the item (s)sold. The credit grantor can then cancel the contract regardless of the seriousness of the breach committed by the credit receiver without having to prove that time was of the essence of the contract or that the breach was a material form of breach.[2] An acceleration clause in credit agreements is another unreasonable clause inserted into credit agreements. In terms of this clause the credit grantor may, in the case of a breach of contract, claim the outstanding balance in terms of the contract in a single amount

Although the clause seeks to deter consumers from breaching such contract while protecting the interests of credit grantors there still exists an element of prejudice negatively affecting the rights of consumers. The legal language contained in credit contracts is often vague and unfamiliar to the consumer which is often intimidating to most consumers. The purpose of this paper is to analyse the adequacy of the current Credit Agreements Act[3] in protecting the basic rights of consumers in Namibia, that is, their right to fair and reasonable contract terms and their right to information regarding their contracts with credit grantors

The need for legislative reform in the field of consumer credit law arose inter alia because of the ineffectiveness of the current consumer credit legislation used in Namibia, the Credit Agreements Act 75 of 1980, in order to deal with the demands of the complex consumer market