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The Consumer Protection Act – PART 2

Contract

The CPA has a most profound effect on the relationship between suppliers and consumers, and particularly in the area of contractual law.  Although it is not always obvious to us, however every day that we purchase goods and services we enter into a contract, whether written or oral, in terms of which services or goods are offered to ourselves and we in turn accept the said offer.

As result whether we are aware of it or not, our lives are governed by contractual law in the economic and social business sense.  Accordingly agreements and their enforcement are the basic mechanism of exchange in our society, and with that comes various contractually agreed terms or default terms.   Prior to the enactment of the CPA, parties with stronger bargaining power (mostly suppliers and service providers) were able to force consumers into a position where they were often forced to accept terms and conditions which were highly unfavourable in various circumstances.  These service providers, or suppliers of goods and services, where able to do this with cleverly drafted contracts which included ‘legal outs’, which gave service providers a mechanism for maximizing their position in terms of the agreement, and minimizing the consumer’s right to question it.

Some of these mechanisms or ‘legal outs’ are contained in the Caveat Subscriptor Rule, which states that there is no duty on a contracting party to inform the opposite party about the contents of the agreement, and further that any person who signs a document without reading it does so at his own risk.  Another mechanism comes in the form of exception clauses, whereby suppliers would add a myriad of terms releasing them of liability in any circumstance, including their own negligence.  A further mechanism is the Parol Evidence Rule, which has the effect that when a contract is in writing (such as a standard form contract), this document will be accepted as the sole evidence of the agreement, despite the parties perhaps having agreed to various terms orally as well.  This essentially means that cognisance is not taken of any other oral agreement between the parties, other than what has been contained in the written document.  Put simply, the supplier can promise you the moon and simply not deliver, as it is not contained in the written document.

Now, taking into account the CPA coming into effect, with the main aim of strengthening the consumers rights and bargaining power, it also seeks to minimize the damage possibly caused by these mechanisms, by having safe guards which are impliedly enforced against suppliers and parties to contracts.

As a result the Caveat Subscriptor Rule has been softened to an extent, thereby obliging suppliers to bring consumers attention to various clauses and or exceptions that may be hiding in the contract.  This is done by highlighting the various sections and obliging the consumer to initial the terms.  Similarly, in respect of exemption clauses, the Act precludes (prevents) any supplier from exempting himself from negligent acts or omissions, and thereby gives the Consumer recourse against such suppliers for negligent acts.

In addition in respect of the Parol Evidence Rule, the CPA has obliged suppliers to redraft their contracts in a manner that is clear, concise and in which there is no room for objections or discrepancies.  It also puts an obligation on such parties to ensure that the agreements are drafted in plain language so that there can be no confusion as to what terms mean.