The Consumer Protection Act On Your Rights To Cancel Agreements

Consumer Protection

Many of us have entered into fixed term contracts only to find out that we don’t have time to go to gym, or have to flee the country but are locked into a costly property lease agreement, or a 2 year cell phone contract we will never use again. But fear not! The Consumer Protection Act provides you with a way out.

The Consumer Protection Act stipulates that fixed term agreements are contracts of a definite duration. Cellular phone contracts, gym contracts, armed response / security contracts, educational institution contracts and property leases are all examples of fixed term agreements.

 

Section 14 of the Consumer Protection Act dealing with the expiry and renewal of fixed term agreements does NOT apply to agreements entered into between juristic persons, irrespective of their turnover or asset value. (This is likely to exclude application of the Section 14 provisions for most, if not all, commercial lease agreements.) A juristic person is defined as a body corporate (company, close corporation, etc.), a partnership or association or a trust as defined in the Trust Property Act, 57 of 1988. Please note that a sole proprietorship is NOT a juristic person. The rules relating to fixed term agreements thus only apply where a natural person (including a sole proprietorship) is the subject of such an agreement.

 

The Act provides that fixed-term consumer agreements must not exceed a certain maximum period. The regulations currently prescribe 24 months from the date of the consumer’s signature as the maximum period, unless such longer period is expressly agreed with the consumer and the supplier can show a demonstrable financial benefit to the consumer. The Act also empowers the Minister to prescribe different maximum periods for different categories of agreements by way of regulation or as provided for in approved industry codes.

 

A consumer may cancel such an agreement before the agreed expiry date by giving the supplier 20 business days written notice.No reasons for the cancellation are required. A supplier may also terminate the agreement prior to the expiry date if the consumer fails to remedy a material breach on his part, after having been placed on 20 business days terms to do so. Consumers should make use of the form contained in Annexure B of the Regulations when giving notice of early cancellation to a supplier.

 

Where an agreement is cancelled by either the consumer or supplier in terms of the above:

 

  •   the consumer remains liable to the supplier for amounts owed up to the date of cancellation [airtime used]; and
  •   the supplier may impose a reasonable penalty or charge for any goods supplied, services provided or discounts granted to the consumer in contemplation of the agreement running for its intended fixed term [discounted or free cellular phone]; and
  •   the supplier must credit the consumer with any amounts that remains the property of the consumer as of the date of cancellation [prepaid and unused airtime].

 

The following must be considered by the supplier in determining the reasonable cancellation charge or penalty:

 

  •   the amount which the consumer is still liable for to the supplier up to the date of cancellation;
  •   the value of the transaction up to cancellation;
  •   the value of the goods which will remain in the possession of the consumer after cancellation;
  •   the value of the goods that are returned to the supplier;
  •   the duration of the consumer agreement as initially agreed;
  •   losses suffered by or benefits accrued to the consumer as a result of the consumer entering into the agreement;
  •   the nature of the goods or services;
  •   the length of notice of cancellation provided by the consumer;
  •   the reasonable potential for the service provider, acting diligently, to find an alternative consumer; and
  •   the general practice of the relevant industry.

 

Notwithstanding the above, the cancellation charge may not have the effect of negating the consumer’s right to cancel a fixed term agreement. In other words, the regulations specifically prohibit charging a consumer the full amount owing in respect of the remainder of the contract.

 

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Comments

Anonymous's picture

So basically you still need to paiy thousands of rands for your cell phone contract as their terms cover this. Even if I am leaving the country in two months. Have you ever tried cancelling a standard contract... Obv not the opains are not worth all the grey hairs. I've never had resend so many copies of documents in my life. Adding this to the mix, I'd buy who ever got this right a drink.
Jon's picture

You owe me a drink I successfully canceled my MTN contract.
Anonymous's picture

Jeesh well done, I must have woken up on the wrong side of the bed.
katlego's picture

Hi, i want to cancell my gym contract, it commenced on the 1st of december 2011 its for a period of 12months and i feel am not going to be needing it, how do i proceed with the cancellation?
jardin's picture

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katherine's picture

Please may someone help me, my husband and i both joined the gym in August 2011 and we both were on vitality, in december 2011 my husbands was retrenched and vitality and medi-aid was cancelled, and i paid R998.00 instead of R200.00 for both members at the end of January 2011, I have now instead my medical aid and have been advised by Viality that in order to get the discount i need to pay 750,00 per member as joining fee and to cancel with vitality i need to paid R898.20 per person with virgin active, Please may someone help me, my husband is unemployed and i cant afford this account, what can i do.
Lee Oosthuizen's picture

I have been on a 3 year gym contract, now I want to cancel it. There are still 10 months till the contract is supposed to end. Under the Consumer protection act, what am i obligued to pay? The gym claims i need to pay a settlement fee of 40% of all monthly payments remaining to contract expiration. I thought under the new act you could just cancel the contraxct?
Zenelle's picture

My fiance and I signed a 1 year contract at a gym . He just got a job 100km away so we have to relocate. I do not understand a thing about what I have just read in the consumer act . Please somebody help us ! Do we still have to pay our contracts even though we will not be able to use the facility???
Henrietta's picture

Jon, can you please assist me how did you successfuly cancelled your MTN contract?
Avuyile's picture

I joined a gym last year at Planet Fitness on the 05 july 2011 but then i realised i was n't going to have time or money to pay for the gym as my hours at work had been reduced and i'm only just a casual and not permanent.. so now im stuck with this gym contract that keeps taking money i don't have from my bank account so now i keep getting negetive amounts on my bank cause the bank charges me R105 for every amount they try to take cause i don't have money at all in my bank account. Please help me, i really don't know what to do now.

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