The Consumer Protection Act will kick in and become law as of October 2010. This piece of legislation will be even more far reaching than the provisions of the National Credit Act and contracting parties and estate agents will find it increasingly difficult to enforce and hold consumers to their contracts as the Act will also apply to the purchase and sale of immovable property.
At present, the conduct between buyer and seller is regulated in terms of the common law which means that parties to a contract are unfettered and they can attach any conditions to an agreement, even where such terms might be regarded as being unfair – by way of example, the voetstoots clause which means what you buy is what you get and you have no or little recourse against the seller for hidden defects.
The Act is designed to protect consumers, especially those that are more vulnerable, such as, as the Act puts it, the ‘previously disadvantaged’ and people that are illiterate.
This means that a court of law in terms of the Act, can make a value judgment whenever a case comes before it and will take into consideration whether or not certain contractual terms were fully understood by the consumer in entering into the contract, and whether such terms were fair.
By way of example, where an engineer enters into an agreement to purchase property in a development and the agreement contains provisions to the effect that the property that is as yet unbuilt, is sold voetstoots, that is, with all defects, the engineer will be obliged to perform in terms of the contract and take transfer of the property, notwithstanding the fact that there are inherent defects to the property.
However, where a person who is illiterate and who has no knowledge of construction and who does not fully understand English, signs a contract in English, (unless it is shown that the risks were clearly explained to her at the time in a language she fully understood, and that she fully understood the implications of entering into the agreement), the court may well set aside the agreement and excuse her from performing in terms of the agreement that she had entered into, on the basis that the agreement was unconscionable, unjust or unfair. (Section 52(3) of the Act).
We suggest that agents, developers and contracting parties familiarise themselves with the provisions of this Act well before it kicks in.
Karien Hunter is a respected property lawyer, and the founder of
Customer is King - The New Consumer Protection Act
Private Property South Africa
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