The Consumer Protection Bill (“the Bill”) is still to be finally signed off by Parliament but in its current form it will have a far reaching impact not only on the suppliers of goods and services – in terms of the protection afforded to consumers by their new found rights – but the Bill will also regulates the terms and conditions of the transaction between the parties. (In terms of the Bill the Minister may even prescribe categories of consumer agreements that are required to be in writing.)
Any effort to include unfair, unjust or unreasonable terms will entitle a consumer to the protection of the courts. The Bill states a transaction will be considered as unfair, unjust or unreasonable if:
- it is excessively one sided in favour of any person other than the consumer or other person to whom the goods or services are to be supplied;
- the terms of the transaction or the agreement are so adverse to the consumer as to be inequitable;
- if the consumer relied upon a false, misleading or deceptive representation, or statement of opinion provided by or on behalf of the supplier to the detriment of the consumer; or
- if there is a term and condition in the transaction which is unfair, unreasonable, unjust or unconscionable; or
- if the fact, nature and effect of that term was not drawn to the attention of the consumer in a manner that satisfies the requirements set out in the Bill itself.
Supplier to provide notice for certain terms and conditions
A supplier must draw the attention of a consumer to any provision of an agreement that it concludes with a consumer which limits in any way the risk or liability of the supplier or any other person, which constitutes an assumption of risk or liability by the consumer, which imposes an obligation on the consumer to indemnify the supplier or any other person for any cause, or constitutes an acknowledgement of any fact by the consumer.
The Bill further sets out the manner in which the notice must be drawn to ensure that the consumer is fully aware of the potential risks and also applies to notices that are placed outside a facility where the activity is unusual or where the consumer could be subject to risk or serious injury.
Prohibited transactions, agreements and terms or conditions
The Bill specifically states that certain provisions will be unlawful if included in a transaction or agreement between a supplier and consumer. Inter alia the following transactions or agreements would be illegal if:
- its general purpose or effect is to defeat the purpose of the Bill, or mislead the consumer;
- it purports to limit or exempt a supplier of goods and services from liability for any loss directly or indirectly attributable to the gross negligence of the supplier or any person acting for or controlled by the supplier;
- it purports to impose an obligation on a consumer to pay for damage to or otherwise assume the risk of handling, any goods displayed by the supplier;
- it falsely expresses an acknowledgement by a consumer that before the agreement was made, no representations or warranties were made in connection with the agreement by the supplier. (Traditional “voetstoets” clauses will no longer be regarded as valid where they state that no warranties have been provided by the supplier.)
- it requires the consumer to forfeit any money to the supplier if the consumer exercises any right in terms of the Bill. (Existing “Forfeiture” clauses will need to be scrutinized);
- it expresses on behalf of the consumer, an authorisation for any person acting on behalf of the supplier to enter any premises for the purposes of taking possession of goods to which the agreement relates. (These clauses are often found in standard Credit Agreements);
- it expresses on behalf of a consumer an undertaking to sign in advance any documentation relating to the enforcement of the agreement, irrespective of whether such documentation is complete or incomplete at the time it is signed. (These clauses are often found in agreements to give the dominant party the ability to enforce the agreement by ensuring that any required documentation can be signed as when needed);
- it expresses on behalf of a consumer, a consent to a predetermined value of costs relating to the enforcement of the agreement, irrespective of whether such documentation is complete or incomplete at the time it is signed.
If any of the above provisions are inserted into a transaction or agreement they will be considered void. (Should there be no “severability” clause in the agreement then the insertion of these terms could result in an inability to enforce the remaining terms of the transaction or agreement.)