The Consumer Protection Act On Your Rights To Cancel Agreements

The Consumer Protection Act On Your Rights To Cancel Agreements
23 Sep 2011

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

  1. Good day.
    I have a big problem. I signed for a membership account at virgin active about 18 months ago. 6 months after the membership,I moved from durban to melmoth ( there is no gym in the area), I then called virgin active and explain my predicament,but they said I have to pay 40% of the remaining 18 months in order to cancel my membership or pay R100 to freeze the account. 6 months later,they unfroze the account and I had to pay full R600 every month for 3 months,then I called them again explaining that I’m back in school and no longer can afford to pay that amount,but they still refused to cancel,even when I told them that it was my grocery money,they still debited my account and left me without suffient food for that month. Now they are charging me R300 for freezing the account. I have been paying for months and I haven’t even been at gym for over a year! I’m really angry at the way they have treated me,what options do I have to cancel this account.
    Thanks

    • Everytime they debit, you should go to the bank within 24hrs to reverse that transaction

      • derrick Says: March 1, 2016 at 9:50 am

        i also cancelled about 2 months in and they want me to pay 2600 cancellation fee at planet fitness AND they will keep debiting my account till i pay the full amount. i was not informed of any cancellation fee . i just got a message saying i have 24hrs to pay 2600 to cancel

  2. Hi,

    I entered into a gym contract at the end of January 2016.. My work circumstances has now changed and I don’t have time for the gym.

    I was thinking it would best to cancel, else I will just be throwing away money. I have read the contract now and it states that I would need to pay 60% of fees for the months not used (24 month contract).

    Therefore I would need to basically pay 60% of 23 months.

    Is the above fair? Is there a way out considerin I have not even been there a month.

    I would have loved to continue but work has to take precedence.

    Any advise in this regard will be greatly appreciated.

    Regards,
    Kajal

    • Hi Kajal, are you on the Full membership or the off-peak one?

      • Hi. I’m in the same boat as Kajal. Is there a way out ? I’m on the off peak membership.

      • I am in a very similar boat to Kajal. I signed my contract in Jan 2016, and I’m going overseas in August. I signed the contract thinking that I would use Liberty Life Rewards programme but now it’s cancelled. I am literally throwing money away and I don’t earn a lot at all. In light of the above information, do I have to pay 40% of my remaining contract?

  3. Please can I get some urgent advise. We signed a fixed term lease for 12 months, ending September 2016. Our circumstances have changed and we have asked our agent if we may give 30 days notice and leave at the end of end of March 2016. Our lease says we can give 20 days notice BUT it also says if the tenant terminates early they have the right to charge us up to three months rent. What if we gave our notice and left in 30 days, could they truly charge us up to three months rent plus penalties. This does not seem reasonable at all.

  4. Good article!

    What about renewals? I have a 2 year phone contract which is about to expire. I receive x amount of minutes & data. It’s a fairly decent deal.

    However, my cellular provider is threatening/forcing me to upgrade before the end of 2years, otherwise they will bill me extra for my minutes & data.

    Do I not have the right to continue paying my current contract until I feel comfortable with an upgrade even if it’s after the 24months?

  5. Hi,just wondering can i cancel Security contract with the Security Company after 1 year .i am not happy with This Security Company and services they provideing.

  6. Hi
    I signed a fixed contract with virgin active seven months ago, i only went to the gym for two weeks nd i called and told them to cancel the contract they refused nd the problem is that im a student and cant afford to pay for services that i aint even using …please help me

  7. Good day, I bought 5 points with The Holiday Club, 30 years ago. I have to payR 237.00 monthly for levies. I’m trying to sell the points now for 3 years, to no avail. How can I get out of this contract as the points are life points.

  8. Good day,

    As a business, we entered into a contract with a supplier, but a few months in realised that their product benefits us in no way, and we requested for the service to be cancelled. We got a response that “As per the contract, clause 4.1 refers that the minimum duration is a period of six months. No cancellation can be processed before the period has lapsed. We unfortunately don’t have a cancellation fee as no cancellations are done prior to the six month period.”

    Is there any way out of it?

  9. I signed a contract with The Gym Company which ended in October 2015. They have continued to debit my account after this. After numerous attempts to contact them by SMS, phone calls and emails they finally got back to me on 02 March 2016. They say I was supposed to give them a cancellation letter 30 days prior to the cancellation date giving them a reason for my wish to cancel. Is this acceptable as I was under the impression that since I signed a contract that ended on 31October the contract should have ended on this day. Please advise.

  10. Hi,

    Can some one advice me,

    I cancelled my lease after a month of signing it. I gave 1.5 months notice.

    The contract stipulates that the agency/landlord has a right to claim 1/3 of the outstanding lease amount (10 months rent). Is this in line with the new CPA?

    I was told to pay for this months rent (the 1st month after moving out) as the agency has not found anyone to re-rent the property yet.

    I agree that I am liable for the rent up until the agency finds a new tenant. I see this as part of the “reasonable cancellation charge” i.t.o the CPA. I understand that they have to be able to prove that they acted dilligently, and provide a breakdown of the damages they want to claim.

    They also gave me a bad credit mark for not paying this months rent on the 1st.

    I dont feel like this agency is acting lawfully in this process.

    Your comments would be appreciated.

  11. I want to cancel a gym contract I entered into with Body Life in Polokwane and they tell me I have to pay the membership fees for the reaminder of the contract period.

  12. Daleen Faber Says: March 6, 2016 at 3:59 pm

    We signed contract with MTN, but they brake the contract by deducting more money than what was agreed on the contract. I only realised this after a few months. How am I covered with mtn contract? How do I get my money back? I already went to MTN many times, and still they did not give me my money back. Why do we sign contract id I’m not covered?

  13. Daleen Faber Says: March 6, 2016 at 4:03 pm

    What can I do if mtn brake contract and deducted more money than what was agreed on the contract? How am I covered with mtn contract?

  14. Jamé Cockrell Says: March 12, 2016 at 4:31 pm

    I purchased the galaxy s7 (edge) on the 11th of March 2016. I also brought a protective cover in store which the sales advisor put on immediately. During the whole process I had asked for the edge and was even asking questions specific to the edge during the process. But failed to notice the sales advisor was giving me the stock standard s7. If you have seen the phone yet it’s beveled all over, even the standard version and upon my return home, discovered upon further inspection that it was not the edge. I signed all the documentation in the way that the agent explains nothing and says sign here and here and here… taking it at face value that I was getting the phone I had asked for. The very next morning I contacted the branch and made it clear I did not get what I asked for and that there was not a meeting of minds. A contractual mistake on the device I was purchasing. All I ask for is to swop it for the device I asked for and am more than happy to pay the difference but was refused. What is my legal recourse?

  15. Hi I have a problem, i took a cellphone on contract. its only been six months and it has given me the same problem for three times now, but the cell c doesn’t want to give me a new cellphone

  16. I sign a contract with my son to buy my house and we used a agent.My son said that he want to cancel base on job insecurity and the agent practically want ahead and forward documents to the lawyers and bank .We ask him to get another buyer he only came back to me wanting his commission now.I feel that the agent did not play his part because he was suppose to find another buyer for the propety but he send lawyers letters for my son to pay his commission.

  17. Hi!

    What does the law say in terms of a notice period at a school?
    My daughter’s school requires a full term’s notice otherwise we will be liable for a term’s fees. We currently pay school fees monthly in advance.

    Thank you!

    • Hi Joanita

      I am also confronted with the same problem. I kinda feel like this rule is unfair as circumstances change, people move and life happens. Why must you pay if you moving town because of work or otherwise.

      I will be looking forward to hear responses regarding this.

  18. In October 2014 I joined Muscle and Fitness and paid monthly contributions. In October 2015 when that contract was finished I renewed but paid for a year upfront. muscle and Fitness have continued to subtract my monthly contributions despite having received a year’s up-front money. When I queried this they said they would not refund the money as I had not cancelled my previous contract with them. can you please advise me as to what recourse I have.

  19. Brian Tladi Says: March 16, 2016 at 2:31 pm

    Hi

    I renewed my contract with MTN in 31 October 2015 for CAT phone. During December 2015 it started with problems of of overheating and freezing. I took it in for repairs in January 2016 and waited for 14 days while i thought it went for repairs. After this period i went to MTN store to collect my phone only to find out it was never sent for repairs. I spoke to the store manager who promised to ensure that the will be booked and fixed. When i went to fetch it month end of February 2016 it was still in the same condition, i called MTN repairs consultant who told me the store booked five phones but only four arrived therefore they had to decline and return them back. i have been without a phone for about three months now and i cant wait any longer. i want to either cancel the contract or they replace the phone with a new one

  20. Brian Tladi Says: March 16, 2016 at 2:31 pm

    Hi

    I renewed my contract with MTN in 31 October 2015 for CAT phone. During December 2015 it started with problems of of overheating and freezing. I took it in for repairs in January 2016 and waited for 14 days while i thought it went for repairs. After this period i went to MTN store to collect my phone only to find out it was never sent for repairs. I spoke to the store manager who promised to ensure that the will be booked and fixed. When i went to fetch it month end of February 2016 it was still in the same condition, i called MTN repairs consultant who told me the store booked five phones but only four arrived therefore they had to decline and return them back. i have been without a phone for about three months now and i cant wait any longer. i want to either cancel the contract or they replace the phone with a new one. please advise

  21. Agnes Shaale Says: March 16, 2016 at 3:52 pm

    I took a contract with MTN on the 15th of January for SONY M4 and on the 20th of January my phone just froze and called the store the next day to report the fault. They told me the phones are being recalled however I only managed to get to the store on Friday and I was told the system is down and they can’t login. I requested for contract cancellation on the same day and I was told the 7 day has elapsed and they can only follow the fixing of device process and not cancellation. The phone is still being fixed to date and I now told to either take another device of the same value or pay for the rest of the contract if I want to cancel. The name is MTN Mall Of The South (0838691453) and the store manager is Lerato and sales person id Ntswaki.

  22. Agnes Shaale Says: March 16, 2016 at 3:52 pm

    I took a contract with MTN on the 15th of January for SONY M4 and on the 20th of January my phone just froze and called the store the next day to report the fault. They told me the phones are being recalled however I only managed to get to the store on Friday and I was told the system is down and they can’t login. I requested for contract cancellation on the same day and I was told the 7 day has elapsed and they can only follow the fixing of device process and not cancellation. The phone is still being fixed to date and I now told to either take another device of the same value or pay for the rest of the contract if I want to cancel. The name is MTN Mall Of The South (0838691453) and the store manager is Lerato and sales person is Ntswaki.

  23. I’ve signed a contract with a gym about 2 years ago. It was a 1yr contract. They carry on debiting your account afterwards without making you sign on for another year. I’ve now decided to cancel the contract but they claim that I need to give 3 months notice. Is it legal for them to do so?

  24. Hi,
    My daughter was enrolled at a private school in Durban which she attended for 2 yrs, 2014 and 2015. Towards the end of 2015 I had an employment crisis and was unaware of my placement within the company for the year 2016. However around the 23rd of January 2016 I contacted the school informing them that due to personal family issues I cannot send my daughter to the school. I did not feel it was necessary for me to tell them that I was having financial issues and would not be able to pay the school fees due to my new job placement which was decided by my employer in the middle of January 2016.
    The school emails me a letter today… stating that I owe them schools fees R18 000+ for a complete term (1st term 2016) because I failed to inform them on time. Is this legal, especially that my daughter has not used their school facility for 2016? …. Please assist me …URGENT

  25. Queline Says: April 1, 2016 at 3:00 pm

    Hi I have signed a 12 month lease agreement and have cancelled it with 2 months written notice. It states in my lease agreement I can be held liable for the rental until the contract expires or until another tenant is found? Is this true?

  26. Ronelle Says: April 7, 2016 at 2:49 pm

    please help me.In 2013 i signed a 5 year agreement to hire a photocopier on behalf of the company i worked for. a few months later the company i worked for closed down. i asked the supplier if i could return the machine and end the contract and they refused.I was not able to make any payments as i was unemployed.Feb 2015 they fetched the machine and i didnt hear from them again. last week i got a letter of demand for the total cost of the 5 year contract R102 000.00 plus 15% interest per annum going forward. I do not have it and dont know what to do next. please advise a way forward.

  27. Tende Akum Says: April 11, 2016 at 7:06 pm

    Hi, my telkom contract expired 3 months ago, I gave them a months notice to cancel my contract and now they are still deducting the debit order but double the amount and when I contacted them they say they have to cancel via telephone but it has been 3 months and no-one has contacted me and they are still taking my money and when I approached my bank to stop the debit order they say they can not help me, could someone please give me some advise on how to solve this?

  28. Hi,

    I have a bit of a strange situation. I have given my 20 working days notice to my gym for termination. Not a problem. But now the gym has fired my personal trainer. He was pretty much the only reason I stayed at the gym.
    I asked if I could be refunded the personal training fees and only pay the monthly gym membership because I had signed on to train with that personal trainer specifically. They said it was not possible and offered to have me train with another trainer. I do not want this as I have built a relationship with my trainer who understands my physical limitations etc. which is why I started training with him in the first place.
    Is there any way around this? I don’t mind paying the gym membership fee but really don’t want to train with someone else I am unfamiliar with. Any advice would be appreciated please.

  29. Hi

    We have signed a contract with the gym at the end of January . They said that they would only deduct the money at the end of February. They did not deduct anything at the end of February we phoned the gym inquiring about the deduction as a conclusion they said the would move up the contract a month and then deduct the first payment at the end of March. As it is the 12th of April they have not yet deducted the money.

    Am I able to cancelle this contact and not pay anything as they broke contract?

  30. Hi

    I took out a family membership at a private gym in October last year. I don’t need the fancy facilities of a commercial gym but I expect it to be safe, which I feel is not and I’m not sure what my R800 joining fee covered. My sister injured her back on a machine and another man split his head open one day just after we had left due to a faulty machine.I have just found out that the equipment is rarely serviced (most of the time more than 1 price of equipment is broken for weeks and they just make it work) and the weight clips are just shaved allum keys, which pop out constantly. I have another 6 months left but I don’t go to gym like I should as I am concerned and also become annoyed when I can’t actually do my work out correctly. Do I have grounds to cancel my contract with these guys without having to give them another cent due to what is seemingly negligent management?

  31. sikhumbuzo sibisi Says: April 25, 2016 at 10:46 am

    I have a fixed contract for 5 years with Flexiclub. Due to financial constraints I can no longer afford the repayments of R485.00 per month. What options do I have in terms of cancellation. At present I am still paying for this contract but feel that I can put this amount to better use.

  32. Barbara Bowker Says: April 26, 2016 at 4:28 pm

    HI. I am being charged a R7,000 penalty for early settlement of my BMW finance agreement and the agent said it was in my contract (early settlement penalty) for deals with over R250k outstanding. But my capital outstanding is only R208k. So they are adding the interest and then saying I owe over R250k.
    Isnt that wrong on so many levels that you are penalised for settling your debt?

  33. Hi, my son joined virgin active in 2015. He is currently at school and would like to know how can he cancel his contract with them as he no longer use the gym anymore.His contract is for 2 years.

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