The Consumer Protection Act No 68 of 2008 (CPA): The Expiry and Renewal of fixed term contracts/agreements, especially Leases. Section 14 (2) continued.
As stated in our previous blog; at The Legal Advice Office we get numerous enquiries from clients and consumers seeking our help in terminating lease agreements because of one reason or another.
The CPA deals with the above subject and in our last blog we looked at section 14(1).
We now turn to section 14 (2).
Section 14(2) reads as follows:
“If a consumer agreement is for a fixed term:
- that term must not exceed the maximum period, if any, prescribed in terms of subsection (4) with respect to that category of consumer agreement;
- despite any provision of the consumer agreement to the contrary (i) the consumer may cancel that agreement (aa) upon expiry of its fixed term, without penalty, or charge; but subject to subsection (3)(a); or (bb) at any other time, by giving the supplier 20 business days’ notice in writing or other recorded manner and form, subject to subsection (3) (a) and (b); or (ii) the supplier may cancel the agreement 20 days after giving written notice to the consumer of a material failure by the consumer to comply with the agreement, unless the consumer has rectified the failure within that time;
- of not more than 80, not less than 40, business days before the expiry date of the fixed term of the consumer agreement, the supplier must notify the consumer in writing or any other recordable form, of the impending expiry date, including a notice of:- (i) any material changes that would apply if the agreement is to be renewed or may otherwise continue beyond the expiry date; and (ii) the options available to the consumer in terms of paragraph (d); and
- on the expiry of the fixed term of the consumer agreement, it will be automatically continued on a month to month basis, subject to any material changes of which the supplier has given notice, as contemplated in paragraph (c), unless the consumer expressly: – (i) directs the supplier to terminate the agreement on the expiry date; or (ii) agrees to a renewal of the agreement for a further fixed term.”
That is the content of section 14 (2).
Our comments on subsection 2 are as follows:
The subsection must be read very carefully and must be correctly interpreted.
The Minister may by Notice published in the government Gazette prescribe the maximum periods applicable to fixed term consumer agreements. All consumer agreements to be valid may not exceed that period eg 5 years.
Both the consumer and the supplier have the right to terminate in terms of this subsection under certain strict provisos.
The consumer may terminate at the end of the fixed period without any penalty of charge; or at any time during the fixed period by formally giving 20 business days early notice of termination in the prescribed form. This right is however subject to the provisions of sections 14 (3) (a) and (b) of the CPA; which deal with outstanding amounts due and a possible reasonable cancellation penalty (bearing a number of facts in mind.)
The supplier may also cancel the agreement on giving 20 business days’ written notice to the consumer if the consumer is in breach of the consumer agreement and does not rectify his breach with that period.
Subsection 14 (2) (c) and (d) are really out of the ordinary types of situations but also must be strictly complied with by the supplier in writing to the consumer regarding material changes to the terms and conditions of consumer agreements in the event that they will continue after the expiry of the fixed term.
As is clear from the above; the CPA can be confusing and needs a trained legal mind to interpret it as accurately as possible.
This is perhaps especially true of section 14(2) which is detailed and can be complicated.
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 (3) 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 firstname.lastname@example.org or email@example.com
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.
The Legal Advice Office Team.