Articles #Discounting agreements

In The Profit Hub (Pty) Ltd v Zuwon Consultants (Pty) Ltd and Another [2026] ZASCA 88, the Supreme Court of Appeal reaffirmed that commercial labels do not determine legal character. Although the parties styled their contracts as “discounting agreements”, the Court examined the allocation of risk, the source of profit, and the function of the underlying claims, concluding that the arrangements were in substance loans. The judgment sets out three hallmarks of a genuine discounting transaction-sale of receivables, transfer of risk to the discounter, and absence of the receivables as security-and explains why their absence will point to a loan.