Consumer Protection Act Article 20: The agreement between the supplier and consumer Part 9

In our previous article, we discussed the agreement between the supplier and consumer regarding the consumer’s right to cancel an advanced reservation, booking or order.

In this article, we shall continue to discuss the agreement between the supplier and consumer in relation to the expiry and renewal of fixed-term agreements.

When a supplier and consumer enter an agreement for a fixed term, for example, a lease agreement for immovable property, the supplier must inform the consumer between 40 to 80 days of its expiry date.

Simultaneously with the aforementioned notice, the supplier must inform the consumer of any changes that would apply if the parties continue with the agreement. In our example of a lease agreement for immovable property, this can include an increase in the rental amount and an increase in deposit, if required. Furthermore, any options that are available to the consumer must also be disclosed. In our example, the Rental Housing Act 50 of 1999 dictates that the lease agreement will continue on a month-to-month basis. However, the consumer may direct that the agreement is to terminate on the expiry period.

Apart from the termination on the expiry of the agreement the consumer may now also terminate the agreement by providing 20 business days’ notice. Should the agreement make specific provisions regarding how such notice is to be provided this must be complied with. However please note that the consumer remains liable for any outstanding amounts and a reasonable termination penalty may be charged by the supplier. What constituted a reasonable termination penalty is determinable based on the consideration set forward in the Act.

If however, the consumer does not terminate the agreement and the supplier has complied with the aforementioned requirements the agreement will automatically continue on a month-to-month basis subject to the disclosed changes. Whether this constitutes allowed negative option marketing is debatable.

In accordance with the Act the Minister may prescribe the maximum duration of fixed-term agreements (currently 24 months subject to conditions), please do not confuse this with certain long-term agreements allowed by other legislation, the manner and form of notices and the basis for determining costs and charges.

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