legal advice banner

Early Termination of Leases and Fixed Term contracts
To Stay or To Go: Is it Worth it?

Lease cancellations:

Section 14 of The Consumer Protection Act No 68 of 2008 (CPA):

In our last blog, we looked at the wording of the whole of section 14 (3) and commented extensively on its content and the background to the section.

Today we will concentrate on section 14 (4) of the CPA and also comment on section 14 as a whole as it relates to a fixed term contract and particularly the cancellation of lease agreements.

Section 14 (4) reads as follows:

“(4) The Minister may, by notice in the Gazette, prescribe—
(a) the maximum duration for fixed-term consumer agreements, generally, or for specified categories of such agreements;
(b) the manner and form of providing notices to the consumer in terms of subsection (2) (c);
(c) the manner, form and basis for determining the reasonableness of credits and charges contemplated in subsection (3); and
(d) other incidental matters as required to provide for the proper administration of this section”.

Section 14(3): therefore deals with the Minister and notices in the Government Gazette from time to time which regulates and prescribe consumer agreements.

If you have not already done so; you must read our previous three blogs on section 14 and its first three subsections; if you want a proper understanding of this very important section of the CPA

Section 14(4): Regulations

The Minister is given the authority to prescribe regulations regarding the maximum duration of all or particular classes of fixed-term agreements, the form which termination notices must take, the determination of a reasonable cancellation penalty, and “other incidental matters as required to provide for the proper administration of the section”. These have all been fully discussed in our previous three blogs and in particular in dealing with section 14 (3) and regulation 5.

Further additional commentary is therefore not necessary here.
In summary, then section 14 is a very important section of the CPA as the Act relates to all fixed-term contracts but we emphasise it in particular as it relates to and regulates the cancellation of lease agreements.

To summarise:

We have seen this month that Section 14 creates a special class of agreement for purposes of the Act, that is, a “fixed-term agreement”. We also saw that even though the implications of the section are significant, the phrase “fixed-term agreement” is not defined. The characteristics which must be present before section 14 will apply must, therefore, be examined.

A limit is also placed on the maximum duration of a fixed-term agreement. Section 14 also gives consumers the right to cancel any fixed-term agreement at the end of its term or on 20 business days’ notice; it provides that consumers must be given notice of the termination date; it regulates the termination of fixed-term agreements by (amongst many other things) prohibiting automatic renewals and prohibits the unilateral amendment of terms and also provides that a supplier can charge a “reasonable cancellation penalty”.

Section 14 also, like all the sections in the CPA, must be interpreted against the backdrop of section 3 which sets out the purposes of the Act. Section 3(1) (a) is a broad statement of purpose. It provides that the Act is aimed at the maintenance of a “consumer market that is fair, accessible, efficient, sustainable and responsible for the benefit of consumers generally”. Section 2(1) provides that the Act must be interpreted to give effect to its purpose(s).

In addition, section 4(3) provides that where a provision of the Act is capable of more than one meaning, the meaning “that best promotes the spirit and purposes of the Act” must be favoured. This means that where the Act or its application in a particular factual situation is unclear it is likely that the interpretation which favours the consumer will be followed.

The question is whether an ambiguous provision in the Act should be interpreted against the consumer even where such an interpretation would cause unnecessary hardship to the supplier? We have also seen that such an approach would be an over-simplification of a complex interaction.

The interests of consumers and suppliers will not always be competing interests.

An outcome may favour the interests of a particular consumer in a particular scenario, but the precedent set by the outcome may lead to higher prices or make a particular business model unprofitable, thus limiting the range of products from which a consumer can choose. The latter outcome would be against consumer interests in a broader sense. Courts should take such broader interests of consumers into account by also considering the reasonable interests of suppliers.

Lastly, we confirm that section 14 has been subject to much criticism, because of its application to lease agreements in particular; and it is for this reason that it is always advisable to seek proper, professional legal advice when dealing with all aspects of lease agreements.

In our next blog; we will look at another aspect of the CPA.

When it comes to legal issues and consumer legal problems; you need an expert in your corner. Get advice.

Please visit our website at www.legaladviceoffice.co.za or send us an email to This email address is being protected from spambots. You need JavaScript enabled to view it. and we will respond to your legal queries within 48 hours.

About our author:

Hugh Pollard (Legal Consultant), has a BA LLB and 42 years’ experience in the legal field. 22 years as a practising attorney and conveyancer; and 20 years as a Legal Consultant.
082-0932304 (Hugh’s Cell Number)
This email address is being protected from spambots. You need JavaScript enabled to view it.
www.legaladviceoffice.co.za

Subscribe to our Legal Advice Blog

Follow our weekly Blogs:
To Subscribe to our Legal Advice blog is simple and easy. Just type your email address at the bottom and click GO

News Feed

Legal Advice Office

South Africa

Kandelaar Street, Vermont, Hermanus
Phone: +27 (028) 316 2458
Email: info@legaladviceoffice.co.za