Right to fair, just and reasonable terms and conditions

Sections 48 to 52:

  • The Act prohibits unfair unreasonable or unjust contract terms;
  • Requires consumers to be given free copies of contracts;
  • Outlaws unilateral changes to contracts;
  • Outlaws certain types of agreements;
  • Outlaws any form of contracting out.

Section 48: Unfair, unreasonable or unjust contract terms:

  • A supplier must not offer to enter into an agreement to supply any goods or services at a price or on terms that are unfair, unreasonable or unjust, and must not negotiate an agreement for the supply of any goods or services in a manner that is unfair, unreasonable or unjust.  The supplier is also prohibited from marketing any goods or services in an unfair or unjust manner;
  • Waiver and exemption clauses are now also regulated – a supplier cannot require a consumer to waive any rights, assume any obligation, or waive any liability of the supplier on terms that are unfair, unreasonable or unjust, or impose any such terms as a condition of entering into a transaction.

What are considered unreasonable, unfair or unjust?

  • One sided contracts;
  • False, misleading or deceptive representation;
  • Assumption of risk;
  • Inequitable terms.
  • Regulation 44 lists 23 terms which are presumed to be unfair.

Section 49: Notice required for hazardous activity (indemnities):

  • A notice to consumers or provision of a consumer agreement that purports to (a)limit in any way the risk or liability of the supplier or any other person, (b) be an acknowledgement of any fact by the consumer, (c) indemnity and (d) assumption of risk:
  • Must be drawn to the attention of the consumer in a manner and form which is in plain language, and the fact, nature and effect thereof brought to the attention of the consumer in a conspicuous manner that is likely to attract the attention of an ordinarily alert consumer.  The consumer must be given an adequate opportunity to receive and comprehend the provision or notice, before engaging in the hazardous activity.
  • In addition, the supplier must specifically draw the fact, nature and potential effect of risk to the attention of the consumer as per the above paragraph and the consumer must have assented to the same by signing or initialling the provision or acknowledged the notice in another manner and indicated awareness of the risk.  If the provision or notice concerns any activity or facility that is subject to any risk of an unusual character or nature, the presence of which the consumer could not reasonably be expected to be aware of or notice, or which an ordinarily alert consumer could not reasonably be expected to notice or contemplate or that could result in serious injury or death.

Section 50: Written consumer agreements:

  • The Minister may prescribe by Regulation categories of consumer agreements that are required to be in writing;
  • If an agreement is in writing – either voluntarily or as required by the Act, then this Section applies irrespective of whether or not the consumer signs the agreement, and the supplier must provide the consumer with a free copy thereof, or electronic access thereto;
  • It must be in plain and understandable language as per Section 22 and must set out an itemised breakdown of the consumer’s financial obligations under the agreement.

Section 51: Prohibited transactions, agreements, terms or conditions:

The following terms and conditions are expressly prohibited in terms of Section 51:

(1)  Where such a transaction, agreement, term or condition is intended to defeat or in effect defeats the purposes and policy of the Act;

(2)  mislead, or deceive the consumer;

(3)  subjects the consumer to fraudulent conduct;

(4)  waives or deprives the consumer of any rights;

(5)  avoids a supplier’s obligations in terms of the Act;

(6)  sets aside or overrides any effect of any provision of the Act;

(7)  authorises the supplier to do anything that is unlawful or fail to do anything required in terms of the Act;

(8)  limits or exempts a supplier of goods or services from liability for any loss directly or indirectly attributable to the gross negligence (or any person acting for or controlled by the supplier) or amounts to an assumption of risk or liability by the consumer for a loss caused by such gross negligence;

(9)  a provision that results from an offer made during the course of negative option marketing;

(10)  a provision that imposes an obligation  on the consumer to pay for damage or assume the risk of handling any goods displayed by the supplier (the consumer is only liable for any loss or damage that results from gross negligence or recklessness on the consumer’s part).

  • Section 51 sets out further prohibited terms and conditions, transactions or agreements, which include provisions relating to claims against the guardian fund, false acknowledgements, forfeiture of money, requiring the consumer to pay for damaged display items, supplementary agreements, consenting to pre-determined costs, repossession of goods, undertakings to sign enforcement documentation, bank cards and pin codes.
  • Should such terms be included, they are void to the extent they are prohibited.

Section 52: Powers of the court:

  • A court or Alternative Dispute Resolution (ADR) body is permitted to go beyond the mere wording of the Act and look at the underlying intentions of the Act or its spirit.
  • Section 52(2) sets out a detailed list of factors for the court or ADR body to consider when making such a determination, for example:  those circumstances that existed or were reasonably foreseeable at the time that the conduct or transaction occurred or agreement was made, and the principles, purposes and provisions of the Act, irrespective of whether the Act was in force at the time.  Such orders would include: an order that any money or property be restored to the consumer; an order that the consumer is compensated for losses or expenses relating to the transaction or the proceedings of the court; and an order that the supplier ceases any practice, or alters any practice, form or document so as to avoid repetition of the supplier’s conduct.
  • Where a provision or terms is found to be unlawful, the court may make an order that the unlawful term or provision is served from the agreement thereby rendering the rest of the transaction or agreement lawful and binding on the supplier and consumer.  Where it is not reasonable to server the offending provision or notice, the court may declare the entire agreement, provision or notice void as from the date that it purportedly took effect.  The court may also make another order that is just and reasonable in the circumstances.