A forfeiture clause, entitling the lessor to cancel the agreement, without notice to the lessee, in the event of breach by lessee is not void for unfairness in terms of the Consumer Protection Act 2008. The CPA should not be construed to invest the court with the power to refuse to enforce contractual terms on the basis that the enforcement would, in its subjective view, be unfair, unreasonable or unduly harsh. The CPA should rather be understood as codifying the established principle that courts will refuse to enforce contractual provisions that are so unfair, unreasonable or unjust that it would be contrary to public policy to do so.
In Magic Vending (Pty) Ltd v Tambwe and Others the lessee and the lessor concluded a written lease agreement, which operated on a month to month basis. Clause 14 of the agreement provided that should the lessee fail to pay rent by the agreed date, or commit a breach of any of the terms of the lease, the lessor would be entitled, without notice to the lessee, to cancel the lease and eject the lessee from the premises.
The clause further provided that should the CPA apply, the lessor will, in the event of breach, be entitled to cancel the agreement and eject the lessee from the premises, after having complied with the relevant provisions of the CPA.
The lessee fell deeply into arears in respect of the payment of the rent, and as result, the lessor invoked clause 14 and cancelled the lease, and applied for the eviction of the lessee from the premises. The lessor alleged that the lessee failed to remedy the breach, after having been sent a notice to do so, and this resulted in the cancellation of the agreement.
The lessee sought to challenge the validity of clause 14, alleging that the clause defeats the purpose of the CPA and is unfair in terms of section 48. Although the court accepted that the CPA applied to the lease agreement, the court found that there was nothing in clause 14 that could be properly characterised as defeating the purpose of the CPA.
The contextual indications of what the legislature contemplated by a term that might be unfair, suggest that it would be one that is exploitative of the consumer. Such a term might, for example, involve an unreasonable waiver by the consumer of any rights that they would ordinarily have in the context of concluding a contract of the given nature, or the imposition of an obligation that it would be blatantly unreasonable for a supplier to attempt to impose.
Forfeiture clauses are, and historically have been, common features of lease agreements. Had it been the intention of the CPA to override the body of jurisprudence that has held them to be enforceable, such intention would have been unequivocally stated by the statute.