Mrs Jansen van Rensburg (Mrs van Rensburg), an Afrikaans speaking 85-year-old
lady, purchased a defective baking oven from an electronic repair shop, sold to her by
Guzman (Pty) Ltd. Both Guzman (Pty) Ltd and Mrs van Rensburg concluded a credit
agreement which agreement was written in English. In terms of the credit agreement
she would pay an instalment of R250.00 (two hundred and fifty rand) a month to
finance the oven. In addition, Ms van Rensburg was informed as part of the agreement,
that she could return the oven at any given time.
After three weeks, she found the oven to be too problematic and decided to return it.
When she did, she was under the impression that she would receive her money back
and the agreement would be cancelled with immediate effect. On the contrary,
Guzman (Pty) Ltd demanded payment in terms of the credit agreement and issued
Mrs van Rensburg with a summons when she continued to default on the payments.
Guzman (Pty) Ltd argued that the agreement was, in fact, not cancelled and that Mrs
van Rensburg voluntarily returned the oven. A clause in the credit agreement
stipulated that agreements must be cancelled by sending a written notice to Guzman
(Pty) Ltd for purposes of a paper trail, which Mrs van Rensburg had failed to do.
Answer the following questions based on the factual scenario above:
(a) Mrs van Rensburg approaches you for legal advice on her contractual dispute
above. Advise Mrs van Rensburg of the common law principles, relevant statutory
obligations, and her contractual remedies. Refer to the case of standard bank of south africa v dlamini case law to support
your legal advice. (16)
Based on the factual scenario, the following legal advice can be provided to Mrs van Rensburg:
1. Common Law Principles:
- Mrs van Rensburg entered into a credit agreement with Guzman (Pty) Ltd. According to common law principles, a valid and enforceable contract must have the following elements: offer, acceptance, consideration, intention to create legal relations, and certainty of terms.
- The fact that the credit agreement was written in English may raise the issue of whether Mrs van Rensburg fully understood the terms of the agreement. However, it is generally assumed that parties entering into a contract are aware of its terms and are bound by them, unless there are exceptional circumstances.
- Mrs van Rensburg has a right to return the defective oven and seek a refund under the common law principle of breach of contract, as the oven purchased was defective and not fit for its intended purpose.
2. Relevant Statutory Obligations:
- The Consumer Protection Act (CPA) in South Africa provides protection to consumers against defective goods.
- Section 56(2) of the CPA states that a consumer may return goods to a supplier within six months of delivery if the goods are defective, and the supplier must, at the direction of the consumer, either repair or replace the defective goods or refund the consumer.
- In Mrs van Rensburg's case, she returned the defective oven within the three-week period, which is within the six months allowed under the CPA. Therefore, she is entitled to a refund.
- It is important to note that the CPA protects consumers regardless of any clauses in a credit agreement that may try to limit or exclude these rights.
3. Contractual Remedies:
- Mrs van Rensburg can argue that the credit agreement was effectively canceled when she returned the oven, as she was under the impression that she would receive a refund and the agreement would be terminated.
- However, Guzman (Pty) Ltd argues that the agreement was not canceled because Mrs van Rensburg did not comply with the requirement to send a written notice for cancellation.
- In such a case, the court will likely consider the principle of contra proferentem, which means any ambiguities or uncertainties in a contract will be interpreted against the party who drafted the contract. Therefore, any ambiguity in the cancellation clause should be interpreted in favor of Mrs van Rensburg.
- The case of Standard Bank of South Africa v Dlamini (2013) highlights the importance of clear and unambiguous contract terms, and the court's approach in interpreting contractual clauses in favor of consumers.
In conclusion, Mrs van Rensburg has a strong case to argue her right to a refund under the common law principle of breach of contract and the provisions of the Consumer Protection Act. The requirement of sending a written notice for cancellation may not be enforceable if there is any ambiguity in the clause. It is advised that Mrs van Rensburg seeks legal representation to defend herself against the summons and potentially counterclaim for a refund.