Most businesses ensure that their customers sign standard terms and conditions for service or goods delivery. Properly drafted and implemented terms and conditions prevent future disputes and provide the business with essential protection against non-payment and product or service liability. One cannot over-emphasise the need to properly explain the business terms and conditions to potential customers.
The Consumer Protection Act 68 of 2008 (CPA) now declares many of the terms and conditions previously used by businesses illegal or unenforceable. Businesses who are unaware of the requirements of the CPA might endure administrative fees if transactions are cancelled or even possible penalties for enforcing unfair business practices towards consumers.
The CPA sets out fundamental consumer rights that place an obligation on each business owner and they need to be aware of the implications hereof and ensure that their standard terms and conditions of trade are aligned with the requirements of the CPA.
The main purpose for the Consumer Protection Act is to:
- Promote a fair, accessible and sustainable marketplace for consumer products and services.
- Establish national norms and standards relating to consumer protection.
- Prohibit certain unfair marketing and business
- Promote a consistent legislative and enforcement framework relating to consumer transactions and agreements.
The CPA aims to always protect the rights of the consumer. The terms and conditions of trade of any business must, therefore, create such a marketplace for the consumer in line with the CPA.
Requirements for drafting Terms and Conditions:
The first important requirements as set out in Section 22(2) of the CPA:
- Terms and conditions have to be drafted in a way that a consumer with average literacy skills can understand the information.
- It must be made available to a consumer in plain and understandable language that makes it easy to comprehend.
In terms of Sections 48 and 49 and Section 44 of the Regulations:
- Suppliers must not offer to supply or enter into an agreement to supply goods or services on terms that are unfair, unjust or unreasonable.
- Suppliers cannot require that a consumer waives any rights, assumes any obligations or limit the supplier’s liability on terms that are unfair, unreasonable or unjust.
- Terms, conditions, agreements, and transactions shall be deemed to be unfair, unreasonable or unjust if they excessively favor another person other than the consumer to whom the goods or services are supplied.
- Terms or conditions that are adverse to the consumer in that they are inequitable shall also be deemed to be unfair.
- Any provision or notice that limits the supplier’s liability must be specifically drawn to the consumer’s attention and must be in plain language, prior to the consumer entering into the agreement.
- This notice or provision must be in a conspicuous manner and form that is likely to attract the attention of an ordinarily alert consumer.
- Terms and conditions may under no circumstances contradict these provisions of the CPA.
The above mentioned and many other unfair and unreasonable terms are still common in contracts or transactions – 8 years after the CPA came into force. The CPA’s provision that contracts be written in “plain and understandable language” is largely ignored, only to create an opportunity for businesses to supply the consumer with general and standard terms and conditions.
Repercussion of non-compliance
Penalties and administrative fees might be incurred if the business does not comply with the requirements of the CPA. It is important to remember that a consumer may contest the business’ terms and conditions and challenge the validity of any transaction concluded on the basis thereof. A consumer may also approach a court to declare specific provisions or the entire agreement between the consumer and the supplier invalid and grant a cost order against the business.
These are only a few of the requirements provided for in the CPA and it is of utmost importance that business owners evaluate their relationship with their consumers in order to set appropriate terms and conditions in line with the CPA and the business’ needs.
All business owners should approach a legal professional for guidance on their current terms and conditions to determine which areas need to be addressed to provide consumers with the fair environment envisioned by the CPA.
ABOUT THE AUTHOR
Frank Maritz obtained his LLB degree from the University of South Africa. He is a Senior Legal advisor for SEESA Consumer Protection & POPI at the Bloemfontein office and has almost 7 years of hands-on experience in Consumer Protection Legislation.