The CPA: Cancellations & Deposits – Part 2

NOTE: The Risk in Tourism series (The Law: Contracts) will continue with Part 18 in a future edition. Part 1 of this current series on Cancellations & Deposits can be viewed here.


This section entitles the consumer to cancel a transaction ‘resulting from’ direct marketing i.e. [Section 16 (3)].

A consumer may rescind a transaction resulting from any direct marketing without reason or penalty, by notice to the supplier in writing, or another recorded manner and form, within five business days after the later of the date on which—
(a) the transaction or agreement was concluded; or
(b) the goods that were the subject of the transaction were delivered to the consumer.

The supplier must return to the consumer any payment received which reimbursement must be within 15 business days from the date of the notice or return of the goods [Section 16 (4)(a)].

Notwithstanding the wording of section 16 (3) i.e. ‘without reason or penalty’, the supplier not without remedy/right of recourse i.e. the supplier may rely on section 20 (6) [Section 16 (4)(b)] i.e. the supplier may charge the consumer as follows: ‘a reasonable amount for use of the goods during the time they were in the consumer’s possession’.


This section of the Consumer Protection Act (CPA) is often seen as the sole issue to be considered – as you can see from my article, nothing can be further from the truth!

The first aspect to bear in mind is that the consumer is entitled to cancel [Section 17 (2)].

The supplier IS entitled to (a) require ‘reasonable deposit in advance’ (b) ‘impose a reasonable charge for cancellation’ [Section 17 (3)].

Such a charge will be ‘unreasonable if it exceeds a fair amount in the circumstances’ – what the latter is, is not clear but the following factors need to be considered may well comprise such ‘circumstances’:
• Nature of the goods or services
• Length of cancellation notice given by consumer
• The ‘reasonable potential’ of the supplier finding an alternative consumer
• ‘The general practice of the relevant industry’.

The above penalty may not be imposed if ‘the person for whom, or for whose benefit the booking, reservation or order was made’ dies or is hospitalized – note it is only the actual pax who gets this benefit.


Described as a transaction entered into in person and includes an agreement by telephone ‘postal order or fax, or in any similar manner’ – one would imagine that the latter can/does include online transactions.

The supplier must disclose its ‘cancellation, return, exchange and refund policies’ [Section 33 (3)(f)].

Bear in mind that such disclosure must meet all the (other) requirements e.g. plain language, conspicuous etc.


This section applies to ‘marketing’ but bear in mind it has not been defined as such – however ‘market’ has been defined as being the promotion and supply of goods and we’ve seen how widely these phrases are defined!

The part of this section that applies to our topic is the duty on the supplier not only to ensure that the wording used is not misleading, ambiguous or deceptive but to clarify ‘any apparent misapprehension’ that the client may have.

Such a ‘misapprehension’ may be reasonably apparent from the client’s body language e.g. frowning if it is a one-on-one sale but very difficult when it is telephonic or on-line. Accordingly the documentation and on-line information must be carefully scrutinized to ensure that such ‘misapprehension’ is avoided and addressed.

This section [Section 41 (3)] has a so-called deeming provision i.e. if the following misapprehension is not corrected, it will be deemed/regarded to be a ‘false, misleading or deceptive presentation’ and I believe this includes not very clearly explaining non-refundable deposit and cancellation provisions i.e.
(i) the transaction affects, or does not affect, any rights, remedies or obligations of a consumer.

To be continued in the April edition.

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’, March 2016.

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