The Consumer Protection Act No 68 of 2008 (CPA): Expiry and Renewal of fixed term contracts:

The Consumer Protection Act No 68 of 2008 (CPA): Expiry and Renewal of fixed term contracts/agreements; especially leases.

At The Legal Advice Office we get numerous enquiries from clients seeking our help in terminating lease agreements because of one reason or another.

The CPA deals with the above subject.

Section 14 of the CPA which consists of 4 subsections deals with the “Expiry and renewal of fixed-term agreements: and we intend to refer to this section and comment on it in our next few blogs.

Section 14(1) reads as follows:

“This section does not apply to transactions between juristic persons regardless of their annual turnover or asset value.”

Our comments on subsection 1 are as follows:

This subsection causes some confusion.

It states quite categorically that the whole of section 14 of the CPA does NOT apply to transactions between juristic persons regardless of their annual turnover or asset value.

A juristic person is a legal entity which is not a natural person made of flesh and blood, like you are me; eg a company, whether a private or public company; or a close corporation, or a trust.

It is probably trite law that if the tenant is a juristic person; then that entity cannot rely on the provisions of section 14 of the CPA.

The section also uses the word “transaction” between juristic persons.

The word “transaction” is widely defined in section 1 of the CPA and includes both an agreement in respect of the supply of both goods and services in exchange for consideration. It probably; but not necessarily would cover a lease agreement. This point is debateable and an argument may be made for both points of view.

But what if the lessor is a natural person and the tenant is a juristic person then that is not a transaction between juristic persons and we would argue that the CPA is applicable to those circumstances?

It is also interesting that the subsection amplifies the juristic person situation by stating that this is so “regardless of their annual turnover or asset value.”

The reason for this is that certain provisions of the CPA are applicable to juristic persons where their gross annual turnover does not exceed R 2 million per annum; or the gross value of their assets are valued at less than R 2 million.

The above points illustrate nthat there are exceptions to the general rule; and that it is possible in certain circumstances that the provisions of section 14 of the CPA are indeed applicable to juristic persons in certain circumstances despite the wording of subsection 14(1) of the CPA.

In any event; we always, in the case of juristic persons, in dealing with lease agreement, also rely on the common law as well as the CPA when considering early termination notices; and in this way hedge our bets.

As is clear from the above the CPA can be confusing and needs a trained legal mind to interpret it as accurately as possible.

You would therefore be strongly advised to contact us at The Legal Advice Office to attend to these queries or any intervention process for you; and not to simply attempt to do so on your own; as you would not normally have the necessary legal or practical experience; or expert knowledge to do so.

In our next blog we will look at section 14 (2) of the CPA.

If you have experienced difficulties with termination a fixed term contract or a lease recently or wish to do so; contact The Legal Advice Office at www.legaladviceoffice.co.za or write to one of our email addresses; either info@legaladviceoffice.co.za or info@thelegaladviceoffice.co.za and we will revert within 48 hours.

Should you wish to comment on this or any other legal topic; just send us an e-mail; and we will respond as soon as we can.

Thank you.

The Legal Advice Office Team.