If the parties explicitly agree in an agreement (in an assignment clause) that either party is not entitled to assign their rights to the agreement to a third party, this restriction is valid and binding and an assignment of rights contrary to a no-assignment clause is invalid and ineffective [Capespan (Pty) Ltd v Any Name 451 (Pty) Ltd 2008 (4) SA 510(C)). If the purchase/loan instrument contains a «no assignment clause», the discount cannot properly provide the Merx and the contract related to the registration does not conclude a discount agreement. A contract for the sale of real estate may contain a no-assignment clause that prevents the seller from assigning the rights to receive the purchase price and it would be very unusual for a loan agreement not to contain a no-assignment clause that prevents the borrower from assigning the rights to receive the loan advance. De l`Usure, n. 128 3 p. R. 40. From a business perspective, an asset has no value unless it can generate cash flow in the future. Stocks pay dividends. Bonds pay interest and projects offer investors incremental future cash flows.
The value of these future cash flows in current terms is calculated by applying a discount factor to future cash flows. One question that is often asked, and this is understandable, is, what is the difference between a discount transaction and a random credit transaction? At first glance, the definitions in the National Credit Act, 2005 (the «NCA») appear almost identical, but one must look at the nature of the transaction to tell the difference between the two. Why could a discount take this risk? The implicit return on a recording agreement is usually attractive. As a rule, the discount only pays when it is fairly certain that the purchase price/credit advance will be paid when transferring/registering bonds and the intermediary controls the cash flow to and from the discount, in fact a form of «security» for the discount, the risk of non-payment by the discount is low. For some discounts, the legal aspects may therefore be less important. For example, if either party to a registration-related agreement is known in advance or it is easily established that the discount is not legally able to deliver the Merx correctly, the parties cannot realistically intend to enter into a discount contract….