By Joubert Galpin Searle Senior Associate - Loren Burton (Commercial Division)

Section 14 of the Consumer Protection Act (CPA) governs fixed term agreements (for example a lease agreement) between persons. A fixed term agreement is for a fixed period and in terms of the CPA , may not exceed 24 months. A consumer in terms of such agreement may cancel the agreement upon expiry of the fixed term without incurring a penalty or charge. If a consumer opts to cancel the agreement at any other time, before expiration of the duration of the agreement, they may do so by giving the supplier 20 business days’ notice in writing. The supplier may in this case impose a reasonable cancellation penalty in respect of the time which is still remaining in terms of the agreement.

A supplier may also cancel an agreement after giving the consumer 20 business days’ notice in writing, in the case of a material failure by the consumer to comply with the terms of the agreement, unless the consumer has rectified the failure withing the 20 days’ notice. In other words, if the consumer rectifies the complaint by the supplier within the 20 days’ notice period, the supplier can no longer cancel the agreement.

The supplier of a fixed term agreement must not more than 80 business days and not less than 40 business days before the expiry of the fixed term agreement notify the consumer in writing:

  • of the impending expiry date,
  • of any changes that will apply to the agreement if renewed; and
  • inform the consumer that on the expiry of such agreement it will automatically continue on a month-to-month basis, subject to the changes which have been included in the notice unless, the consumer directs the supplier to terminate the agreement upon the expiry date or to agree to renew the agreement for a further fixed term on the amended terms.

It is important to be aware of the provisions of Section 14 of the Consumer Protection Act and to apply these provisions to any agreements that fall within the parameters of a fixed term agreement. If you require assistance with drafting your agreements or the termination or renewal of such agreements, please contact our offices for assistance.

For more information, please contact Loren Burton on +27 41 396 9200 / This email address is being protected from spambots. You need JavaScript enabled to view it. 

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