The Consumer Protection Act No 68 of 2008 (CPA): Expiry and Renewal of fixed term contracts/agreements, especially Leases. Continued: Section 14 (3) & (4).

Today; to finalise this set of blogs on the above topic; we look at the last two subsections of section 14 dealing with the expiry and renewal of fixed term contracts and once again we will concentrate on leases as this is the most frequent source of enquiry; although the provisions of the whole of section 14 apply to ALL fixed term contracts.

We now turn to section 14 (2).

Section 14(3) reads as follows:

“Upon cancellation of a consumer agreement as contemplated in subsection (1) (b):-

  1. a) the consumer remains liable to the supplier for any amounts owed to the supplier in terms of that agreement up to the date of cancellation; and

(b) the supplier:-

(i) may impose a reasonable cancellation penalty with respect to any goods supplied, services provided, or discounts granted, to the consumer in contemplation of the agreement enduring for its intended fixed term, if any; and

(ii) must credit the consumer with any amount that remains the property of the consumer as at the date of cancellation; as prescribed in terms of subsection (4).”

The above is the whole of subsection 3 and this is where the “reasonable penalty” for a supplier and landlord for lease emanates from; which causes so many headaches.

It is however not too difficult;  but needs to be properly interpreted in the light of the facts of each particular case and that is where you need proper professional legal advice to know what your rights and duties are either as a landlord and supplier of as a tenant and consumer.

Whether a landlord is in fact and in law entitled to a reasonable penalty in terms of subsection 3 is a moot point; as he does not supply goods as such and neither does he provide a service; although that is a debate for another time.

Once again; we urge you to seek proper, professional legal advice and legal services when dealing with the cancellation of fixed terms contracts; especially leases. We reiterate that the CPA and its contents can sometimes can be confusing and need a trained legal mind to interpret it as accurately as possible in any given circumstances.

This is perhaps especially true of section 14(3) which deals with the so called “early termination penalty” 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.

Section 14 (4) reads as follows:-

“The Minister may, by notice in the Gazette, prescribe:-

  • the maximum duration for fixed term consumer agreements, generally, or for specified categories of such agreements;
  • the manner and form of providing notices to the consumer in terms of subsection (3); and
  • the manner, form and basis for determining the reasonableness of credits and charges contemplated in subsection (3); and
  • other incidental matters as required to provide for the proper administration of this section.”

That is the entire content verbatim of subsection ( 4) od section 14 of the CPA; and basically empowers the Minister to prescribe the maximum duration of consumer agreements and types of consumer agreements; as also to prescribe the form in respect of notices to consumers; and also the form and basis for determining the reasonableness of credits and charges; including the so called “reasonable penalty” that landlords and agents are so keen to define and prescribe themselves either in the lease or in their own prerogative after the lease is ended.

It is not that simple as can be seen from the above.

Once again we must stress that it is always advisable for you as a consumer to seek proper, professional legal advice and legal services when dealing with the cancellation of fixed terms contracts; especially leases; and also with regard to the repayment of deposits and the payment of any alleged “reasonable penalties” either in terms of the lease contract itself or in terms of section 14 (3) of the CPA.

We reiterate once again that the CPA and its contents can sometimes can be confusing and complicated, especially in its correct interpretation and needs a trained legal mind to interpret it correctly and as accurately as possible in any given circumstances.

This is perhaps especially true of section 14(3) itself which deals with the “early termination penalty” and can be especially complicated.

Again we repeat that you would therefore be strongly advised to contact us at The Legal Advice Office to attend to these queries or any intervention processes 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.

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

Should you wish to comment on this or any other legal topic; just send us an e-mail; and we will respond within 48 hours.

Thank you.

The Legal Advice Office Team.