Written by: Pistorius Scheepers Attorneys
***Please note that this article is to guide consumers and suppliers on what to do in terms of their rights and obligations under the CPA when it comes to cancelation of agreements and advanced bookings. This information does not constitute as legal advice and should not be relied upon in lieu of consultation with legal advisors or an attorney
This should have been your year, where you would of experience all the excitement, where you would have made one of the biggest commitments: For better for worse, richer or poorer, in sickness and in health, but then all of a sudden, a world pandemic arose and it’s ok to feel overwhelmed. But now it’s time to face reality and to understand your rights.
Should you not have received any communication from your wedding venue, we highly suggest that same be enquired immediately, as it is very important to know what your options are and what the suppliers will offer you in order to accommodate you.
Most frequent questions asked by Suppliers and Consumers are as follows:
- What happens to a wedding we booked and paid for?
- Is the supplier obligated to refund deposits/advance payment in respect of goods which were to be supplied or services which were to be rendered?
- Is it possible for the consumer to recoup deposits or payments already made in full for goods that would have been supplied or services that should have been rendered?
- What happens if the consumer does not want to proceed with the wedding and don’t want to make use of the services of the supplier due to the fact that they want to get married immediately?
- What happens is the consumer wants to get married on an alternative specific date, but the supplier does not have that specific date available?
- What happens if the supplier closed down, and is in possession of the funds of the consumer?
Before you agree to any alternative options that the suppliers provide you it is important to understand what your rights are, and what you are entitled to.
Now it is recommended to start at the root of the issue, by digging out the contract that was entered into between the consumer and the supplier. If you have an agreement it is common sense that a person is bound by such agreement unless if there is a legal reason that enables you to cancel the agreement.
There are a few aspects that the supplier and the consumers should take into consideration:
What would the contractual position be of the Consumer and the supplier?
The general principals of the law of contract, whether there is a case of supervening impossibility (which is what the National State of Disaster/nationwide lockdown induced by COVID-19), a party to a contract who is negatively impacted as a result of impossibility, may be excused from performing in terms of the contract. At common law, vis major and casus fortuitus (which is an incident of vis major) are extraordinary circumstances beyond the control of the parties which is often referred to as so-call “act of God”. Vis Major or casus fortuitus are, in modern times referred to as Force Majeure.
It is important to see if your contract contains a vis major clause and whether this specific vis major clause covers the aspects of epidemics and/or pandemics. It all would depend on the specific wording of the clause in your contract.
When one assumes that a vis major clause is included in the contract, and where the wording thereof construed to cover the COVID-19 world pandemic, a party may be excused in order to perform his contractual obligations, for the duration for which the vis major continues, unless the contract makes provision that in case of such circumstances after a specific amount of time the contract may be cancelled at the preference of either one of the parties.
In the event that performance is suspended without a right to cancel during the vis major period, and where the vis major event has lapsed, then the contract shall continue and performance shall resume to such an extent to which it is practically possible.
Should the contract also contain a right to cancel, it will be usually linked with the fact that cancelation will be without any liability. In the event where the performance will become practically possible at a later stage but that the performance is not feasible, then the contract will be terminated by necessity. The contract will also usually stipulate if deposits will be refunded under the current circumstances. The Supplier and consumer will then have to proceed on such a basis.
Should the supplier or consumer wish to exercise their right to terminate the agreement, they must keep in mind to make sure how payments or performance already made will be dealt with under the provisions in terms of the contract.
In very rare cases the contract will allow the affected party to claim financial compensation from the non-effecting party for the cost associated with the force majeure event.
In such circumstances, the Supplier and the Consumer must revert back to the contract and see what cost the affected part is entitled to, how same should be calculated and what mitigation obligations apply. Should you be the claiming party, don’t get your hopes up to easily recover the cost in the current economic climate.
What is the Common Law position of the supplier and consumer in the event that the contract does not have a vis major clause?
The general principals of the common law and in particular the principle of performance will become relevant in the scenario where the contract between the supplier and the consumer does not make provision for a vis major clause.
The COVID-19 pandemic was not an event that could have been reasonably foreseen by the conclusion of the agreement between the parties, which lead to performance not being possible, and in this scenario, it would discharge the supplier and the consumer from their obligations as indicated in the contract.
In the event where the consumer made a deposit or alternatively advanced the full payment to the supplier, and where performance has not occurred by the supplier, and the performance by the supplier at a later stage is not possible nor tendered by the supplier, then the consumer will have a claim against the supplier for the repayment of the funds.
The breakout of the COVID-19 pandemic, could not have been foreseen by anyone and therefore fault cannot be attributed to the supplier nor the consumer, but it does not necessarily mean the performance is impossible. The fact that performance is inconvenient or difficult for one of the parties will not be seen as a valid reason, and therefore it would not be a sufficient reason to rely on the doctrine of impossibility of performance.
One should take current circumstances into consideration in order to determine if performance was not possible. In theory, the performance may in a sense still be possible, but the circumstances wherein the Supplier and the Consumer find themselves in due to the COVID-19 world pandemic, it would be highly unreasonable for the parties to insist that the obligations of the supplier and consumer be honoured. For example where a venue is cancelled due to the fact that only 100 people can attend the wedding due to the regulations published by Governmental Authority, and the bride and groom invited 300 guests, then it would be regarded to be impossible to perform and therefore the reciprocal obligations of both the supplier and the consumer will be discharged.
What does the Consumer Protection Act (“CPA”) say and how is it applicable to the supplier and the consumer?
In addition, the common law the consumer can rely on the CPA. The scope of Section 17 of the CPA is wider than the common law, insofar that it provides for the rights of the consumer in order for them to be eligible to have the right to cancel a reservation that was made in advance, bookings or any orders for the supply of any goods and/or services, irrespectively of the vis major event.
Section 17 of the CPA will be available to the consumer in circumstances where the consumer cannot rely on the common law doctrine of impossibility of performance as explained in detail above.
In the event where the supplier has undertaken to supply goods or services to the consumer, the supplier may request that the consumer advance a reasonable deposit and may also impose a reasonable charge for cancelation. The aim of this is to mitigate the cancelation damages.
The charge must be reasonable taking the circumstances into consideration, and should it exceed a fair amount it would be unreasonable.
Section 17 of the CPA is specifically aimed at the event where the consumer has made a booking reservation and the consumer made the decision to cancel the same, whether by reason of vis major or otherwise. An example would be where the consumer booked a wedding venue and paid in full, but cancelled it on his or her own accord due to the COVID-19 pandemic, one would say that the consumer is acting within the ambit of the CPA.
The section goes further and it clearly indicates that a supplier may not force a consumer to pay a cancelation fee in respect of a booking, reservation or order and that the consumer is responsible for such cancelation fees due to death or hospitalisation. For example, where the consumer is forced to cancel the booking due to the fact that he or she was exposed to the COVID-19 virus and it subsequently leads to hospitalisation the supplier will not be permissible to demand that the consumer pay him or her a cancelation fee and will have no other choice but to refund the deposit or the advance payment in full.
It is important to note that Section 17 of the CPA does not make provision for situations where the consumer made a reservation with the supplier, and the supplier made a decision to cancel. In such an event there shall be no basis in Section 17 of the CPA on which the consumer may rely in order to recoup a deposit or advance payment in the light of COVID-19 pandemic where the supplier has cancelled the booking or reservation.
It is very clear from the above, that your starting point, is to see what the terms and conditions are as stipulated in the contract entered into between the supplier and the consumer.
The terms in the contract will indicate to the supplier or the consumer when a deposit and advance payment shall be refunded in the event of cancelation due to the COVID-19 pandemic and also whether such amounts are refundable or not.
As previously indicated, if your contract does not give you any guidance in this regard, you may purely rely on your common law remedy.
The CPA is there to protect the consumers rights in order to ensure that deposits and/or payment lost due to cancelation as a result of the COVID-19 pandemic subject to a cancelation fee that might be applicable.
It is our opinion that the supplier will only benefit by refunding the consumer or alternatively for the supplier to provide the consumer with alternative dates that fit their schedule. By doing this, it will enable the supplier to maintain a long-standing relationship with the consumer.
Should you have any queries on the above, you are welcome to contact our offices, to set up Consultation in order for us to properly advise you on what is stipulated in terms of your contract.
Contact details: 063 680 5338