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The Consumer Protection Act - Prohibited Contracts and Terms

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contracts_small.jpgThe Consumer Protection Act aims to protect the rights of Consumers by ensuring that the environment in which they operate is fair, accessible and sustainable. It also endeavours to encourage responsible Consumer behaviour.

The Act sets out certain fundamental consumer rights, as well as highlights how to protect those rights. An essential practical characteristic to the protection of Consumer’s rights is that dealt with in Section 51 of the Act, namely: Prohibited Transactions, Agreements, Terms or Conditions. Not only does this Section highlight which aspects of an agreement, contract or transaction are not allowed, it also states that any portion of the contract which violates this Act is void.

One of the primary objectives behind Section 51, is to unequivocally outline the fact that any contract, term or condition which ultimately defeats the purposes, provisions, policy, consumer rights and suppliers’ obligations set out in the Consumer Protection Act is prohibited.  Thus, practically, parties are not allowed to contract out of the provisions set out in the Act.

Although the Section begins in these broad terms, it does ban certain specific types of contracts, terms or conditions. These include instances where:

  • The Supplier of goods/services contracts out of alternatively limits their liability for any loss which occurs as a result of their gross negligence. Cases where the Consumer specifically assumes the above risk or is obliged to pay for damages, ultimately assuming the risk of handling any goods displayed by the Supplier is also included.
  • Contracts, Agreements or Transactions resulting out of negative option marketing. This is when the agreement automatically comes into existence, unless the Consumer specifically declines the offer made by the Supplier.
  • Contracts, Terms or Conditions which hinder, in any manner, the Consumer’s right to claim against the Guardian’s Fund.
  • There is a provision in the Contract which falsely states that: the Supplier made no representations or warranties to the Consumer in connection with the Agreement prior to the Agreement being made; or that the Consumer has received goods/services or a document required by this Act.
  • The Consumer has to surrender money to the Supplier should they enforce any aspect of this Act alternatively pay money over to the Supplier, where the Supplier is not entitled to such money in terms of this Act.
  • The Consumer authorises the Supplier to enter any premises to take goods which relate to the Agreement; the Consumer undertakes to sign documentation in advance which relates to the enforcement of the Agreement, regardless of whether the document has been completed or not; the Consumer agrees to a predetermined amount pertaining to the costs relating to the enforcement of the Agreement.
  • The Consumer agrees to leave with the Supplier any of the following: ID document, credit card, debit card, bank account card, an automatic teller machine access card or anything similar alternatively provides a personal identification code/number which can be used to access an account (such as a bank account).

Whether one realises it or not, as many people do not fully read through the ins and outs of all the contracts they sign, many of the above provisions feature in a wide variety of agreements. Certain conditions feature predominantly in specific industries, while others occur in a large percentage of ‘everyday’ contracts.

It is important that Consumers become aware of their rights and thus do not enter into agreements which contain the above specified provisions.  Suppliers on the other hand are cautioned to conduct a review of agreements to verify that there are no prohibited clauses.

QUICK NOTE:

There are certain transactions, contracts, agreements , conditions or terms which are prohibited in terms of the Consumer Protection Act, set to come into force in April 2011. Should a prohibited transaction, contract, agreement, condition or term be found the entire agreement, alternatively a portion of the agreement will be deemed to be void.

The most significant of these prohibitions is the fact that one cannot have a provision in one’s contract which violates any aspect of the Consumer Protection Act. This includes the fact that Consumers are not able to contract out of the rights that are afforded to them by the Consumer Protection Act.

Clients (Suppliers) are urged to:

  • review the contracts entered into with their Customers (Consumers), and ensure that there are no terms in violation of the Act, for instance Consumers contracting out of their rights afforded to them in terms of the Consumer Protection Act;
  • ensure that their contracts contain a severability clause, stating that should any provision of their contract be found to be invalid, the remainder of the contract shall still be deemed to be valid;
  • Review business practices and sales and marketing procedures that may be deemed negative option marketing;
  • Review clauses in contracts that pertain to monies that may be claimed by the Supplier from the Consumer

Article written by: Katherine Thompson, Chetty Law - Technology and Innovation Law, www.chettylaw.co.za, email: katherine@chettylaw.co.za.

Please Note: The content of this article does not constitute legal advice. Specific queries should be directed to Chetty Law or other suitably qualified attorneys in order to obtain relevant specific and/or appropriate legal advice.

Copyright (c) 2016, the credited author
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