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The CPA: Cancellations & Deposits – Part 3

CANCELLATION, PENALTIES & NON-REFUNDABLE DEPOSITS

Part 1 in this series can be viewed HERE and Part 2 HERE.

SECTION 48: UNFAIR, UNREASONABLE OR UNJUST CONTRACT TERMS

This section not only addresses the contract terms but also the sales process (‘the manner’) and the waiver of rights and assuming of obligations – if we consider these in the broadest conservative terms, I believe it includes the issue under discussion.

As with section 41, this section contains a deeming provision [Section 48 (2) and read with regulation 45] and any of the aforesaid will be deemed to be ‘unfair, unreasonable or unjust’ if it is ‘excessively one-sided, inequitable or the presentation is false or misleading’.

So, how does a supplier deal with it to ensure he/she does not fall foul of this section? Clearly the non-refundable deposit can be seen to be ‘one-sided’ but I don’t be believe it is ‘excessively’ so as to be ‘inequitable’ provided it meets the norms prescribed in section 17 and are carefully explained and, as one travel agent does, the explanation is detailed in a separate sheet signed by the client.

SECTION 49: NOTICE REQUIRED FOR CERTAIN TERMS AND CONDITIONS

WHAT: This section [Section 49 (1) & (2)*] requires certain aspects of the transactions to be brought to the specific attention of the consumer and such aspects include the following, which I believe includes the topic under discussion:
(a) limit in any way the risk or liability of the supplier or any other person;
(b) constitute an assumption of risk or liability by the consumer.
* presence of which the consumer could not reasonably be expected to be  aware.

HOW: It must be in writing, ‘conspicuous’ and  of such a nature that it will ‘attract the attention of an ordinarily alert consumer’.

WHEN: It must be drawn to the attention of the consumer at the earliest of when the contract is entered into or payment is made.

It is important to note that is can’t be done at the last minute (‘by the way’) or in a rush as must be done in such a way that the consumer [per Section 49 (5)] has an ‘adequate opportunity in the circumstances to receive and comprehend the provision or notice’.

THE CONSEQUENCES OF NON-COMPLIANCE/BREACHING PROVISIONS

‘A’ SECTION 51: PROHIBITED TRANSACTIONS, AGREEMENTS, TERMS OR CONDITIONS

Any transgression of any of the above will result in such activity being void and thus unenforceable [Section 51 (3)] – it could mean the section/clause or the entire agreement!

‘B’ SECTION 52: POWERS OF COURT TO ENSURE FAIR AND JUST CONDUCT, TERMS AND CONDITIONS

This section pertains to a transgression of sections 40, 41 & 49.

Factors the court must consider:
• Did the consumer get fair value?
• The balance of power. e.g. knowledge & literacy of consumer     such as first time traveler.
• Forseeable circumstances.
• Conduct of the parties.
• Use of plain language.

Section 52 (2) (h) – important for T&C and record-keeping:

• Whether the consumer knew or ought reasonably to have known of the existence and extent of any particular provision of the agreement that is alleged to have been unfair, unreasonable or unjust, having regard to any:
(i) custom of trade; and
(ii) any previous dealings between the parties.

• Steps the court may take:
(i)  Court determines transaction or agreement was, in whole or in part, unconscionable, unjust, unreasonable or unfair (i.e. sections 40 & 48) – order supplier to:
(i) Restore money or property to the consumer;
(ii) Compensate the consumer for losses or expenses relating to:
(aa) the transaction or agreement; or
(bb) the proceedings of the court;
(iii) Require the supplier to cease any practice, or alter any practice, form or document, as required to avoid a repetition of the supplier’s conduct.
Person alleges that an agreement, a term or condition of an agreement, or a notice to which a transaction or agreement is purportedly subject, is void in terms of this Act (Section 51) or failed to satisfy any applicable requirements set out in section 49;

• If void: sever part of the agreement, provision or notice; alter it; declare the entire agreement, provision or notice void retroactively;
If breaching section 49: sever the provision or notice from the agreement; declare it to have no force or effect;

• IN ADDITION to the above it can ‘make any order that is just and reasonable’.

‘C’SECTION 100: COMPLIANCE NOTICE & PENALTIES

• The consumer commissioner (‘CC’) can issue a compliance notice i.e. requiring supplier to rectify transgression;
• Failing that the CC can impose penalties.

‘D’ SECTION 111:PENALTIES (if convicted of offence)

Contravention of section 107 (1) (Breach of confidence), to a fine or to imprisonment for a period not exceeding 10 years, or to both a fine and imprisonment; or
in any other case, to a fine or to imprisonment for a period not exceeding 12 months, or to both a fine and imprisonment.

‘E’ SECTION 112: ADMINISTRATIVE FINES (National Consumer Tribunal)

An administrative fine imposed in terms of this Act may not exceed the greater of 10 per cent of the respondent’s annual turnover during the preceding financial year or R1 000 000.

When determining an appropriate administrative fine, the Tribunal must consider the following factors:
• The nature, duration, gravity and extent of the contravention;
• any loss or damage suffered as a result of the contravention;
• the behaviour of the respondent;
• the market circumstances in which the contravention took place;
• the level of profit derived from the contravention;
• the degree to which the respondent has co-operated with the Commission and • the Tribunal; and
• whether the respondent has previously been found in contravention of this Act.

This post concludes the 3-part series on Cancellation, Penalties & Non-Refundable Deposits. The Risk in Tourism series (The Law: Contracts) will continue with Part 18 in the May 2016 edition of Tourism Tattler.

Disclaimer: This article is intended to provide a brief overview of legal matters pertaining to the travel and tourism industry and is not intended as legal advice. © Adv Louis Nel, ‘Louis The Lawyer’, April 2016