How to cancel your Armed response Agreement as a matter of fact any contractial agreement The Consumer Protection Act (the “CPA”) came into effect on 1 April 2011. Part C of Chapter 2 of the CPA regulates the consumer’s rights to choose. Section 14 of the CPA falls under this heading and sets out the restrictions on and the permissible durations of fixed term contracts. Section 14 does not apply to any transaction concluded between juristic persons regardless of their annual turnover. In terms of the definitions clause, a juristic person includes: • a body corporate; Barring any exclusions, Section 14 will apply to all transaction involving fixed term agreements. CANCELLATION Subsection 2(a) read together with the proposed Regulation 6(1) limits the duration of any fixed term agreement to 24 months. What is concerning is that despite any provision in any agreement to the contrary, the consumer may cancel a fixed term agreement upon expiry of the agreement without paying any penalty or at any other time, by giving the supplier 20 business days’ notice in writing or in some other recorded manner. Where a consumer cancels the agreement during the subsistence of the agreement on notice, he/she will be liable, in addition to any amounts owed at the date of cancellation, to pay to the supplier a cancellation penalty in contemplation of the agreement enduring for its intended fixed term. The proposed Regulation 6(2) provides that a reasonable credit or charge may not exceed 10% of the amount which would have been payable by the consumer for the remainder of the agreement, excluding interest, if any. A supplier is also entitled to cancel the fixed term agreement pre-maturely on 20 business days’ written notice but only in the case of the consumer committing a material failure of his/her obligations in terms of the agreement. We will have to wait and see what types of breach the court regards as materially sufficient for the supplier to envoke this section. If the consumer remedies his breach prior to the lapse of the notice periods, the agreement will remain in force. EXPIRATION AND RENEWAL OF A FIXED TERM AGREEMENT Not more than 80 days and not less than 40 days prior to the expiration of a fixed term agreement, the supplier must notify the consumer in writing of the impending expiry date, including a notice of any material change to the agreement if it were to be renewed or continued past the expiry date and advise the consumer of any options available to him/her. Upon expiry of the fixed term contract, and in the absence of the consumer directing the supplier to terminate the agreement or agrees to a renewal, the agreement will automatically continue on a month-to-month basis, subject to material changes as notified by the supplier. CONCLUSION Section 14 of the CPA leaves the door open for quick and easy cancellation of agreements which in turn poses a threat to the sanctity of agreement and limits the freedom of parties to an agreement to choose the terms on which they wish to contract. This can have adverse effects for many sectors and lead to uncertainty for many suppliers that are affected by the CPA, especially in forecasting and budgeting. Whether these provisions will be tested in court remain to be seen, as the CPA is still very new. That being said, consumers will greatly welcome the relief that Section 14 of the CPA offers them. We know that peoples circumstances change and the CPA gives them an out in this regard without the risk of being chased for years by the suppliers with exorbitant claims for damages. Regardless of what whether you are a consumer or a supplier, the CPA is here to stay. Businesses whom are suppliers should be making sure that they are acquainted with the provisions that affect them and seek professional advice to safeguard their interests. For more information on the CPA and how it affects you and your business, please feel free to contact our offices for assistance. We hope the above is of interest to you.
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