The Future of Standard Form Contracts in South Africa with Particular Reference to Recent Developments in the Law

Abstract

Standard form contracts are drafted in advance by the supplier of goods or services and presented to the consumer on a take-it-or-leave-it basis. The consumer’s only choice is to adhere to, or refuse to adhere to, the terms of the standard form contracts. They have various advantages for both contracting parties such as cost saving and uniformity. They also have some disadvantages as they are one-sided against consumers and impose unfair terms to the contracting party. Once a contract is signed, it must be honoured. However, public policy can be used to rescue the person from greatly unfair obligations that arise from the contracts. Public policy derives from the Constitution and the fundamental values it enshrines. Consequently, a contractual term that violates the Constitution is contrary to public policy and unenforceable. The Consumer Protection Act (CPA) has a significant impact on standard form contracts. It imposes a duty on the supplier to draw the attention of the customer to the exemption clauses or other contractual terms that oust common law protection. However, the CPA applies only to transactions between suppliers and consumers. The prohibition of unfair, unreasonable or unjust contract terms should apply to every contract. Parliament should intervene and enact legislation to prevent the abuse of freedom of contract by the strong party, to the detriment of other contracting party.

DOI: 10.5901/mjss.2013.v4n13p335