We often hear about people entering into Agreements which they later tend to regret. People find themselves having to commit to monthly instalments in respect of debts or spending their hard-earned monies fulfilling contractual obligations which they could have avoided at an earlier stage after entering into the Agreements.

In terms of National Credit Act No. 34 of 2005 (NCA), a Cooling-off period is the right to cancel or rescind an Agreement without having to provide reasons. If a Party to an Agreement makes use of this right, he/she does not commit breach of the Agreement. 

This right affords a Party the freedom to either cancel the Agreement or right to return goods within a certain time period without fear of suffering any legal consequences arising from the Agreement.

When is the Cooling-off period applicable?

It will only be available when entering into a:

• Lease Agreement; and
• Instalment Agreement.

These Agreements must have been concluded at any other location other than the business of the premises of the other Party providing a service or credit. If one were to conclude an Agreement at the premises, the reasoning for the Cooling-off right would not  apply as the Party is not put under pressure to enter into an Agreement. Because that would have allowed the Party seeking a service or credit enough time to inspect, ask questions, have time to apply his/her and then bind himself or herself to the Agreement.

Duration of the right

The right has to be exercised within five (5) business days after the Agreement was signed or concluded, unlike Franchise Agreements which are subject to an unique 10 days Cooling-off period in terms of the Consumer Protection Act 68 of 2008, as amended (CPA).

If the right is available, it must be exercised in writing and it must be dispatched either by hand, fax, e-mail or by registered mail. And once the Party has exercised his/her right by utilising the Cool-off right, full restitution is granted to both Parties.

Conclusion

As mentioned above, the Consumer is afforded five (5) business days (excluding weekends and public holidays) after he/she signs an Agreement in order to back out of the Agreement. However, this is limited to Leases and Instalment Agreements entered into at a location other than the business premises of the Service Provider.

Therefore to avoid unforeseen circumstances and possible regrets the next time you enter into a Lease or Instalment Agreement,  make a calculated decision and consult a legal expert as soon as you have a change of heart to know what options are available to you.

Here at SchoemanLaw Inc, we can assist with all your Contract-related matters.

Written by Petrus Khumalo, Candidate Attorney, Schoeman Law