Consumer Protection Act Article 19: The agreement between the supplier and consumer Part 8

In our previous article, we discussed the agreement between the supplier and consumer in regard to the right to return goods.

In this article, we shall continue to discuss the agreement between the supplier and consumer but in relation to the consumer’s right to cancel an advanced reservation, booking or order.

A consumer now has the option to cancel an advanced booking, reservation or order for goods or services. However, a supplier is not completely unprotected as the consumer may be liable for a termination penalty in certain instances. Due to this, it is common practice that a supplier will request an advanced deposit for a booking, reservation or order.

The reasonable termination penalty, or charge, must be reasonable taking the following factors into consideration:

  • The nature of the goods or services;

  • The length of notice of termination;

  • The potential to find an alternative consumer between the termination notice and the time of termination;

  • Any general industry practices.

The aforementioned is used to determine the likelihood of the supplier being able to cover any loss by obtaining an alternative consumer to take up the goods or services.

However, it is important to note that the supplier may not charge a termination penalty if the consumer was unable to comply with the booking due to the death or hospitalisation of the person for whom the booking was made.

It is therefore clear that the Act has shifted the risk from the consumer to the supplier in the above instances. A supplier would be well advised to obtain sufficient insurance in these instances.

***Kindly note that the contents of this article are intended for information purposes only and do not constitute legal advice. Consult your attorney.

In our next article we will continue to discuss the agreement between the supplier and consumer but in relation to the expiry and renewal of fixed-term agreements, the cancellation by the supplier and the intention to close a service facility.