Consumer Protection Act: Time to revisit your trading terms

2011-02-09 00:00

DO your trading terms contain provisions similar to these?

•The supplier’s liability is in all circumstances, including gross negligence of the supplier, limited to the replacement cost of the goods supplied.

•The customer is liable for and indemnifies the supplier against any claims or costs arising out of the use of the goods.

•Unless the customer notifies the supplier of any defects in the goods within five days of delivery of the goods, the goods are deemed to be in good order and condition and the customer cannot make any claim against the supplier.

As of April 1, 2011, when the Consumer Protection Act 2008 comes into full force, terms such as the above will be considered unfair, unreasonable or unjust contract terms.

These terms will be void and will not afford suppliers protection.

Suppliers may not require consumers to waive any rights, assume any obligations or waive any liability of the supplier on terms that are excessively one-sided in favour of the supplier

This applies also to terms that are so adverse to the consumer that they would be considered inequitable.

Suppliers subject to the Act can no longer contract out of all liability, especially where they have been grossly negligent.

The Act, and accordingly what will be considered unfair, unjust or unreasonable, must be interpreted to favour the consumer.

The terms used in the Act will need to be deciphered by the courts and the tribunal as consumer issues come before them, but in the meantime it is safe to say that a number of terms that suppliers previously considered standard and necessary for their protection will no longer pass muster.

The regulations that will be published in March in final form will list 30 or more provisions that will be specifically prohibited.

Suppliers of goods and services will have to examine all consumer supply contracts and delete or amend any offending terms.

The Witness, in association with Deneys Reitz Inc, will publish a weekly column on the Consumer Protection Act (CPA), which comes into effect on April 1, touching on a variety of topics to inform businesses and consumers about the widespread and serious implications of the act. Next week’s article will be on notice requirements for consumer agreements. (The CPA requires that certain clauses have to be specifically brought to the consumer’s attention.)

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