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June 16, 2018

Contracts under the Consumer Protection Act

A client asked: “I signed a tuition agreement that requires me to give a full term’s notice. Am I bound by this?”

I answered:

As you are a “protected person” - defined in the Consumer Protection Act (CPA) as any individual or any legal entity with a turnover and an asset value of under R2 million - the notice period is not binding, and you need only give 20 business’ days’ notice (section 14 and section 51). However, this is subject to payment of a reasonable penalty  for premature cancellation.

The CPA sets out the following rights and obligations concerning contracts between suppliers and consumers:   

·         The contract must be in plain language (section 22);
·         A consumer may rescind a transaction that came about because of direct marketing, without reason or penalty. The consumer merely needs to give the supplier written notification of his or her intention to rescind the agreement, and this notification must be given within 5 business days of the transaction being concluded or, within 5 business days of the goods being delivered to the consumer. (Section 16);
·         The consumer has the right to an itemised breakdown of his or her financial obligations under the contract and to receive a copy of the contract free of charge (section 5);
·         Suppliers must not offer to supply, supply or enter into an agreement to supply goods or services at an unfair, unjust or unreasonable price or on terms that are unfair, unjust or unreasonable. Suppliers are also prohibited from marketing any goods or services in an unfair or unjust manner (section 48);
·         Consumers must be alerted to any contract term that limits the consumer’s rights. This notice or provision must be in a conspicuous manner and form that is likely to attract the attention of an ordinarily alert consumer (typically highlighted at the top of the contract or initialled by the consumer (section 49); and
·         A contract may not contain clauses that are misleading or deceptive, subjects the consumer to fraudulent conduct, directly or indirectly waives or deprives a consumer of a right entrenched in the CPA, avoids a supplier’s duty in terms of the CPA, sets aside or overrides the effect of any provision contained in the CPA,  authorizes the supplier to do anything that is unlawful in terms of the CPA or limits or exempts a supplier of goods or services from liability for any loss attributable to the supplier’s gross negligence section 51).