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WCLawyer
WCLawyer, Attorney
Category: South Africa Law
Satisfied Customers: 14745
Experience:  L.LB (UOVS)
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Customer Question

We have a lease agreement on an apartment in Hermanus, Western Cape South Africa.  We have been in the apartment since 01 April 2011.  May we terminate this lease agreement early (now and leave at the end of November 2011) and what will the penalty fee be?

Submitted: 2 years ago.
Category: South Africa Law
Expert:  WCLawyer replied 2 years ago.

Good day.

This is an info request to assist you better. Please continue on this thread.

1. Is it a fixed lease?

2. Does the contract say anything about early termination?

Customer: replied 2 years ago.

Unfortunately I do not have the lease agreement with me in the DRC where I am at present. As far as I can remember the lease is for one year.

Expert:  WCLawyer replied 2 years ago.
The Consumer Protection Act does allow for the early termination of a fixed term contract within the fixed term. This is regulated by section 14 of the Act.
14. Expiry and renewal of fixed-term agreements.—(1) This section does not apply to transactions between juristic persons regardless of their annual turnover or asset value.
(2) If a consumer agreement is for a fixed term—
(a) that term must not exceed the maximum period, if any, prescribed in terms of subsection (4) with respect to that category of consumer agreement;
(b) despite any provision of the consumer agreement to the contrary—
(i) the consumer may cancel that agreement—
(aa) upon the expiry of its fixed term, without penalty or charge, but subject to subsection (3) (a); or
(bb) at any other time, by giving the supplier 20 business days’ notice in writing or other recorded manner and form, subject to subsection (3) (a) and (b); or
(ii) the supplier may cancel the agreement 20 business days after giving written notice to the consumer of a material failure by the consumer to comply with the agreement, unless the consumer has rectified the failure within that time;
(c) of not more than 80, nor less than 40, business days before the expiry date of the fixed term of the consumer agreement, the supplier must notify the consumer in writing or any other recordable form, of the impending expiry date, including a notice of—
(i) any material changes that would apply if the agreement is to be renewed or may otherwise continue beyond the expiry date; and
(ii) the options available to the consumer in terms of paragraph (d); and
(d) on the expiry of the fixed term of the consumer agreement, it will be automatically continued on a month-to-month basis, subject to any material changes of which the supplier has given notice, as contemplated in paragraph (c), unless the consumer expressly—
(i) directs the supplier to terminate the agreement on the expiry date; or
(ii) agrees to a renewal of the agreement for a further fixed term.
(3) Upon cancellation of a consumer agreement as contemplated in subsection (1) (b)—
(a) the consumer remains liable to the supplier for any amounts owed to the supplier in terms of that agreement up to the date of cancellation; and
(b) the supplier—
(i) may impose a reasonable cancellation penalty with respect to any goods supplied, services provided, or discounts granted, to the consumer in contemplation of the agreement enduring for its intended fixed term, if any; and
(ii) must credit the consumer with any amount that remains the property of the consumer as of the date of cancellation,
as prescribed in terms of subsection (4).
(4) The Minister may, by notice in the Gazette, prescribe—
(a) the maximum duration for fixed-term consumer agreements, generally, or for specified categories of such agreements;
(b) the manner and form of providing notices to the consumer in terms of subsection (2) (c);
(c) the manner, form and basis for determining the reasonableness of credits and charges contemplated in subsection (3); and
(d) other incidental matters as required to provide for the proper administration of this section.

Like you can see, the Consumer Protection Act does not put a set penalty amount when you terminate the agreement within the fixed term. The Act does make provision for the Minister to set particular criteria that must be adhered to. This is included in Item 5 (2) of the Regulations.
5(2) For purposes of section 14 (3), a reasonable credit or charge as contemplated in
section 14 (4) (c) may not exceed a reasonable amount, taking into account—
(a) the amount which the consumer is still liable for to the supplier up to the date of cancellation;
(b) the value of the transaction up to cancellation;
(c) the value of the goods which will remain in the possession of the consumer after cancellation;
(d) the value of the goods that are returned to the supplier;
(e) the duration of the consumer agreement as initially agreed;
( f ) losses suffered or benefits accrued by consumer as a result of the consumer entering into the consumer agreement;
(g) the nature of the goods or services that were reserved or booked;
(h) the length of notice of cancellation provided by the consumer;
(i) the reasonable potential for the service provider, acting diligently, to find an alternative consumer between the time of receiving the cancellation notice and the time of the canceled reservation; and
( j) the general practice of the relevant industry.

The only other way to terminate a fixed term agreement within the fixed term is if there is some breach of contract from the supplier, or if the supplier agrees that it may be canceled without penalty.

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