One of the chief objectives of the Consumer Protection Act 68 of 2008 (CPA) is to promote a fair, accessible and sustainable marketplace for consumer products and services. The CPA establishes national norms and standards relating to consumer protection, provides for standards of consumer information, prohibits certain unfair marketing and business practices, promotes responsible consumer behaviour and promotes a consistent legislative and enforcement framework relating to consumer transactions and agreements.

The provisions dealing with unfair, unreasonable and unjust contract terms and the consequences thereof is considered in greater detail below.

Contract terms

Section 48 of the CPA deals with unfair, unreasonable or unjust contract terms. Section 48(1) provides that a supplier may not:

  1. offer to supply, or enter into an agreement to supply, goods or services on terms that are unfair, unreasonable or unjust, or at a price that is unfair, unreasonable or unjust;
  2. market any goods or services, or negotiate or conclude a transaction or agreement, in a manner that is unfair, unreasonable or unjust; or
  3. require a consumer to waive any right, assume any obligation or waive any liability for the supplier on terms that are unfair, unreasonable or unjust.

Section 48(2) of the CPA, without limiting the generality of section 48(1) above, sets out the circumstances under which the provisions of a term or agreement could be regarded as unfair, unreasonable or unjust contract terms. This provision of the CPA provides that a transaction or agreement, a term of such a contract or agreement, or a notice to which a term or condition is purportedly subject, is unfair, unreasonable or unjust if:

  1. it is excessively one-sided in favour of any person other than the consumer or other person to whom goods or services are to be supplied;
  2. the terms of the transaction or agreement are so adverse to the consumer as to be inequitable;
  3. in entering into the transaction or agreement, the consumer relied upon a false, misleading or deceptive representation or a statement of opinion provided by or on behalf of the supplier, to the detriment of the consumer; or
  4. the transaction or agreement was subject to a term or condition, or a notice to a consumer contemplated in section 49(1), and the term or condition is unfair, unreasonable, unjust or unconscionable or the fact, nature and effect of that term or condition was not drawn to the attention of the consumer in a manner that satisfied the requirements of section 49 of the CPA, which deals with certain instances where notice is required for certain terms or conditions.

Notice to consumers

Section 49 of the CPA provides that any notice to consumers or provision of a consumer agreement that purports to:

  1. limit the risk or liability of the supplier or any other person;
  2. constitute an assumption of risk or liability by the consumer;
  3. impose an obligation on the consumer to indemnify the supplier or any other person for any cause; or
  4. be an acknowledgement of any fact by the consumer,
    must be drawn to the consumer's attention in a manner that satisfies the requirements of sections 49(3) and (5) of the CPA.

Section 49(3) of the CPA provides that a provision, condition or notice must be written in plain language and section 49(5) of the CPA provides that the consumer must be given an adequate opportunity in the circumstances to receive and comprehend the provision or notice.

Powers of the court

If, in any proceedings before a court, the court has determined that a transaction or agreement was, in whole or in part, unjust, unreasonable, unfair or unconscionable, the court may make a declaration to that effect and make any further order the court considers just and reasonable in the circumstances, including but not limited to an order to:

  1. estore money or property to the consumer;
  2. compensate the consumer for losses or expenses relating to the transaction or agreement or the proceedings of the court; and
  3. require the supplier to cease any practice, or alter any practice, form or document, as required, to avoid repetition of the supplier's conduct.

If, in any proceedings before a court concerning a transaction or agreement between a supplier and consumer, it is alleged that an agreement, term or condition of that agreement or a notice to which a transaction or agreement is subject is void in terms of the CPA then a court may make any of the following orders:

  1. severing any part of the relevant agreement, provision or notice, or altering it to the extent required to render it lawful, if it is reasonable to do so having regard to the transaction, agreement, provision or notice as a whole; or
  2. declaring the entire agreement, provision or notice void as from the date that it purportedly took effect.

A court may also make any further order that is just and reasonable in the circumstances with respect to that agreement, provision or notice, as the case may be.

About Dentons

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.