Many of us have struggled under the flattery of a exceptional salesman to purchase something and thereby bind ourselves to an agreement without really knowing the product or the terms and conditions of the agreement. It’s usually those salesmen that promise their product will change your life, you will see results within the first week, or that’s not all, you get this and that extras, or it might be your dream home, and if once the estate agent leave then your wife usually tell you, what inspired you your silly and irrational man! Once a person then actually read the content of the contract you realise that there is no termination clause and you now perform under the terms and condition of the contract only because you believe that you are tied up. In most instances that was the case until now. South African law, however, provides for a cooling-off period in order to protect consumers from specifically this “hasty” decisions as explained above. Law thereby provides consumers with the right to a cooling-off period which usually runs for a certain number of days after conclusion of an agreement allowing the consumer to cancel the agreement or contract.
The Consumer Protection Act 68 of 2008 (CPA) which came into effect on 31 March 2011. The primary aim is to provide for protection to consumers. Section 16 (3) of the CPA provides that a consumer may cancel an agreement that resulted from any form of direct marketing, without any reason. The consumer should only within 5 days from
the date of the transaction or agreement; or
from the date that the goods, which was the subject of the transaction, has been delivered to the consumer;
give a written notice to this effect to the supplier. In other words, if the goods were delivered on a date after the closing of the agreement, the five-day cooling-off period starts to run from the date on which the goods were delivered, and not from the date on which the agreement was concluded. A supplier must then refund any payments received from the consumer in terms of the agreement within 15 days after he/she has received the notice of cancellation to the consumer and the consumer must return any or all goods received from the supplier to the supplier. The cooling off period in terms of the CPA is only applicable to transactions arising from direct marketing. In other words, where a person would come knocking on your door and try to convince you to purchase his products.
Further, the regulations of the CPA prescribe for the regulation of franchise agreements. The regulations stipulate that each concession agreement the following words at the top of the first page of the agreement, which also include a right to a cooling-off period: “the franchise taker may cancel a franchise agreement without charge or penalty within 10 days of the signing of such agreement, by giving written notice to the concession grantor’, thus also providing for a cooling off period to franchisees.
The Alienation of Land Act, 68 of 1981 (ALA) offers a buyer with a 5-day cooling off period in terms of section 29A of the ALA. Section 29A provides that a purchaser of the property has a five day period after signing a purchase agreement for immovable property to cancel the agreement by written notice to the seller or his or her agent. The written notice must be signed by the purchaser. The purchaser must identify the agreement and then cancel it unconditionally.
Where a contract is revoked, the seller must be refund the full amount or any deposit to the purchaser within 10 days from the date the notice of cancelation was delivered by the purchaser. The five-day cooling off period in terms of the ALA will not apply if:
- the purchase price of the property, or the price offered for the property by the prospective buyer is more than R250 000 or such higher amount as the Minister may prescribe;
- the purchaser or prospective purchaser is a trust or a person other than a natural person;
- the purchaser or agent buy the property at a public auction advertised.
- the seller and buyer concluded an agreement of sale for the same property on substantially the same terms;
- the purchaser has reserved the right to nominate a person for his rights and obligations in the agreement to take over;
- the purchaser purchased the property through the exercise of an option that was open for exercise for a period of at least five days.
Neither the seller or his agent shall be entitled to any compensation or damages if the contract is terminated. Although the ALA does not provide for the case where the cooling-off period is not stipulated in the contract itself, the court ruled in the case of Sayers v Khan 2002 (5) SA 688 (C) if the buyer’s right to a cooling-off period is not set out in the contract, the contract is deemed to be null a void.
An additional statute providing for a cooling-off period is the National Credit Act, 34 of 2005 (NCA). The NCA limits the right to a cooling off period to leases and installment agreements incurred on a place other than the registered premises of the credit provider. The credit consumer will then have 5 days after he signed the contract to cancel it. In order to cancel the credit agreement the consumer must give a written notice to this effect to the credit provider as well as any goods, if any was received, must be returned to the credit provider. The credit provider must, within 7 days of receipt of the notice refund the consumer any deposits made by the credit consumer.