South Africa: Food Law Know-How - Part 5: Standard Terms And Conditions

Last Updated: 24 January 2012
Article by Simone Monty

Farm Link December 2011

The Consumer Protection Act is predominantly focused on affording consumers the right to fair, just and reasonable terms and conditions (eg fair contract terms) and the right to fair value, good quality and safety (eg product liability).

Much attention in the Act is directed at safest business practices and processes of organisations, and the terms and conditions under which they operate. Suppliers will have to evaluate whether their business practices comply with the Act and make the necessary changes to their standard terms and conditions.

Prohibited terms and conditions

One of the primary objectives behind section 51 is to unequivocally outline the fact that any contract, term or condition, which ultimately defeats the purposes, provisions, policy, consumer rights and suppliers' obligations set out in the Act, is prohibited. Accordingly, terms and conditions of a party cannot result in contracting out of the provisions set out in the Act.

In addition, in terms of section 4 of the Act any standard form contract or other document prepared or published by or on behalf of a supplier can be subject to scrutiny in terms of the Act. It is therefore crucial for the terms and conditions of such a document to be drafted in accordance with the Act. If not, penalties will follow and those provisions on which the business may be reliant to reach its objectives can be unenforceable.

Prohibitions

Although the section begins in these broad terms, it goes on to prohibit certain specific types of contracts, terms and/or conditions. These include, but are not limited to, the following:

  • The supplier of goods/services contracting out of or alternatively limiting its liability for any loss, which occurs as a result of its gross negligence. Cases where the consumer specifically assumes the above risk or is obliged to pay for damages, ultimately assuming the risk of handling any goods displayed by the supplier, are also included.
  • Contracts, agreements or transactions resulting out of negative option marketing. This is when the agreement automatically comes into existence, unless the consumer specifically declines the offer made by the supplier.
  • Contracts, terms or conditions which hinder, in any manner, the consumer's right to claim against the Guardian's Fund.
  • A provision in the contract which falsely states that the supplier made no representations or warranties to the consumer in connection with the agreement prior to the agreement being made; or that the consumer has received goods/services or a document required by this Act.
  • Provisions that provide for the consumer to surrender money to the supplier should it enforce any aspect of this Act, alternatively pay money over to the supplier, where the supplier is not entitled to such money in terms of this Act.
  • The consumer authorising the supplier to enter any premises to take goods which relate to the agreement; the consumer undertaking to sign documentation in advance which relates to the enforcement of the agreement, regardless of whether the document has been completed or not; the consumer agreeing to a predetermined amount pertaining to the costs relating to the enforcement of the agreement (these are all very commonly found in standard terms and conditions).
  • The consumer agreeing to leave the supplier with any of the following: ID document, credit card, debit card, bank account card, an automatic teller machine access card or anything similar, alternatively providing a personal identification code/number, which can be used to access an account (such as a bank account).

Finally, it is also important and required in terms of the Act to set out terms and conditions in plain and understandable language and to highlight any crucial parts of the agreement, like acknowledgement given by the consumer, so that they can be understood without undue effort.

Many people do not fully read through the ins and outs of all the contracts they sign, and many of the above provisions feature in a wide variety of agreements. Certain conditions feature predominantly in specific industries, while others occur in a large percentage of "everyday" contracts.

Industry-wide exemptions
The Act provides for a mechanism in terms of which a regulatory authority may apply to the Minister of Trade and Industry for an industry-wide exemption from certain provisions of the Act. The application for such an exemption must be based on the fact that there is an overlap between the provisions of the Act and the regulatory scheme administered by the relevant regulatory authority.

For example in the case of the telecommunications industry, there is an overlap between ICASA's regulations and those of the Consumer Protection Act, which may cause ambiguity. The Minister may only grant an exemption, if the applicable regulatory scheme provides better, or at least similar, consumer protection than the protection provided for in the Consumer Protection Act.

Conclusion

Best practise for business in light of the requirements of the Act dictates that all terms and conditions of service (as well as conditions for any promotions or competitions) are set out in clear and uncomplicated language. This entails providing, where possible, a simple summary of the applicable terms and conditions and then also providing the full longwinded legal explanation. Make sure there is nothing unexpected hidden in the full terms and conditions that is not highlighted in the plain language summary.

Provide an easy to find link to the terms and conditions of any offer where that offer or promotion is in electronic format. Inform recipients of their right under the Act to cancel their order or contract within five days if they are dissatisfied and receive a refund.

Only send out direct marketing messages in the allowed time periods (once again these times have not yet been agreed upon).

Update and revision of standard terms and conditions, which often remain unchecked for many years, and following best practices, as suggested above, should be considered a necessity in order to avoid any negative repercussions in the conduct of business in the era of the Act.

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.

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