The President declared the COVID-19 virus a national disaster in terms of the Disaster Management Act 57 of 2002 (“Act”). One of the objectives of declaring a national disaster is to prevent and mitigate the disaster, in this case the spreading and contracting of the virus. However, this has brought about questions on already existing consumer agreements and whether they will still be honoured or not.
Some of the measures put in place by the President during the national disaster are as follows:
- a travel ban on foreign nationals from high risk countries;
- a number of ports have been closed; and
- gatherings of 100 people or more are prohibited.
These measures will affect existing contracts, for example, the cancellation of theatre events, concerts, large conferences and travelling facilities like flights and so on. These are events that may require more than 100 people at a gathering. Many people must now hear that their plans are being cancelled by the service provider or they are considering cancelling it themselves due to concerns around the COVID-19 virus.
Seeing as most service providers may require a deposit upfront, consumers are wondering whether they will be entitled to a refund.
- The Consumer Protection Act (“CPA”) largely regulates consumer agreements with service providers. However, there are agreements where the CPA will not be applicable, for example, agreements with the State or related to other legislation like the National Credit Act.
- A consumer may choose to cancel any advance booking or services to be supplied by giving 20 days’ notice. The CPA allows the service provider to impose a reasonable cancellation fee. If that is the case, the consumer may still get a portion of his/her deposit back.
- Alternative options can also be considered by the service provider, for example, to rather postpone or give credit instead of cancelling completely.
During the state of national disaster, some service providers are unable to render service due to the ban/prohibitions. On the other hand, some consumers might be hospitilised and have no other choice than to cancel.
- A service provider may not accept money from a consumer, if s/he is not able to provide the services. This means that service providers should be careful of making bookings if they will not be able to comply with same during the state of national disaster.
- It is worth noting that the CPA specifically states that a service provider may not impose any cancellation fee if the consumer is unable to honour his/her side of the consumer agreement due to hospitalisation or death.
In light of the above, the declaration of a national disaster is to mitigate the transmission of the COVID–19 virus in the interest of the public’s health and this might impact existing consumer agreements.
Date updated: 20 March 2020