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Tuesday Jul 21, 2015

'Voetstoots' and the Consumer Protection Act

Since the Consumer Protection Act 68 of 2008 (CPA) came into operation there has been much interest on the position of the voetstoots clause in relation to the CPA.

The general view is that one would no longer be able to include a voetstoots provision in contracts if the transaction falls within the protection of the CPA. A 'transaction' in terms of the CPA refers to agreements concluded in the ordinary course of business by a supplier and a consumer. For example, a property company in the business of buying and selling property may not include a voetstoots clause in its sale agreements when disposing of such properties.

However, where a company, not engaged in the business of buying and selling property chooses to acquire a property for one of its employees for instance, it may nevertheless include a voetstoots clause when disposing of the property, as the disposal is not in the seller's ordinary course of business.

The reason for the exclusion of voetstoots provisions in contracts which fall within the ambit of the CPA is that voetstoots provisions are considered to be "unfair, unreasonable and unjust" in terms of section 48 of the CPA. Accordingly, it may be argued that selling goods in terms of a general 'umbrella' voetstoots clause is a clear waiver and deprivation of a consumer's right.

In the context of a sale of property, certain suppliers (such as a developer) will no longer escape liability for latent defects if such supplier is disposing of the property in its ordinary course of business. It must be pointed out that the CPA does not prevent a supplier from selling goods of a particular condition; however, the condition of such goods must be disclosed. For example, a disclosure in a sale agreement - to the buyer - that the roof may leak from time to time during heavy rains. a presumption against the voetstoots provision, unless expressly included in the sale agreement. A voetstoots provision in a private sale agreement does not exempt sellers from liability in instances where they misrepresented or were aware of latent defects in the property and failed to disclose, as a warranty against latent defects applies automatically by operation of law.

When it comes to private, one- off sale agreements to which the voetstoots clause may apply, it is advisable to insert a provision allowing the buyer to inspect the property (or to have experts inspect the property) as a condition precedent. Such a provision gives the buyer the option to withdraw or renegotiate if the inspection report reveals defects. In addition - or alternatively - the buyer may request that the seller warrants that he is unaware of any latent or patent defects in respect of the property at the time of the sale. Thus, the operation of the voetstoots clause is countered by this type of condition and/or warranty.

It should be noted that if a seller mandates an estate agent to sell his property, then any representations in respect of the property made by the estate agent, will fall with the scope of the CPA. This is because these estate agents are acting in their ordinary course of business. Accordingly, estate agents will not be able to rely on the operation of the voetstoots clause.

Samantha Kelly is an associate and Nayna Parbhoo a director in the real estate practice at Cliffe Dekker Hofmeyr.

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