Starting an online business has never been easier. But do you have all your legal ducks in a row?

Starting an online business has never been easier. But do you have all your legal ducks in a row?

Author
Martin Kotze GM
Martin Kotze GM
5 min ready
Buy or Sell something

Starting an online business has never been easier. But do you have all your legal ducks in a row?

The scenario

During the lockdown, jenny decided to start her own online business. She created an amazing Wix website and things are picking up. 

Jenny got some legal advice from her friend that is a legal advisor at a big bank. Her friend told her that she needs to include standard terms of sale on her website and these terms must limit Jenny’s liability where the consumer modifies the product.

Jenny’s friend also tells her that the terms need to provide that if the product is not used as indicated, then the use of the product will be at the sole risk of the consumer. 

Lastly, the terms need to stipulate that the consumer acknowledges that it is their responsibility to arrange for the courier and that Jenny will not take any responsibility for any damage to the product that may arise when transporting the product. 

After browsing the web, Jenny finds an example of terms of sale. The terms of sale appear to contain nice Latin phrases, very long sentences and lots of legalese that no one can understand and are written in a very small hard to read font. She thinks that these terms are perfect (who reads them anyway…) and should cover her against the risks highlighted by her friend.

She creates a nice looking t’s & c’s page, copies and pastes the terms of sale into the page thinking that now she is covered against the risks that her friend told her to address in her standard terms of sale.

Is she covered?

Well, when considering the specific situation it does appear that risks she wants to address and the way Jenny wants to do it appears reasonable and fair. However, as with most things legal, there is not a straightforward answer. So let’s try and break it down.

The legal stuff

Section 48 of the Consumer Protection Act, 2008 (the “CPA”) determines that:

A supplier must not require a consumer:

  • to waive any rights;
  • assume any obligation; or
  • waive any liability of the supplier,

on terms that are unfair, unreasonable or unjust, or impose any such terms as a condition of entering into a transaction.

Section 49 of the CPA determines that:

If your standard terms of sale:

  • limit in any way the risk or liability of the supplier or any other person;
  • constitute an assumption of risk or liability by the consumer;
  • impose an obligation on the consumer to indemnify the supplier or any other person for any cause; or
  • be an acknowledgement of any fact by the consumer,

then these terms must be drawn to the attention of the consumer in a manner and form that satisfies the formal requirements of subsections (3) to (5).

Subsections (3) to (5) then determine (amongst other things):

  • The term must be written in plain language; and
  • The fact, nature and effect of the term must be drawn to the attention of the consumer in a conspicuous manner and form that is likely to attract the attention of an ordinarily alert consumer.

The above is certainly a mouth full. What does it mean?

Section 48 of the CPA does not mean that you cannot require a consumer to waive any rights, assume an obligation or require the consumer to waive liability. It is possible to require a consumer to waive rights, assume an obligation or waive liability if it is on fair reasonable and just terms.

So what are fair, reasonable and just terms? Another important question is if it is possible that fair, reasonable and just terms can still be regarded as unfair, unreasonable or unjust in terms of the CPA?

A term or condition is unfair, unreasonable or unjust if the transaction or agreement was subject to the supplier providing notice to the consumer as contemplated in section 49 (1) of the CPA, and the fact, nature and effect of that term, condition or notice were not drawn to the attention of the consumer in a manner that satisfied the applicable requirements of section 49.

Even if the terms that Jennys included in the contract are fair and reasonable when considering that the specific terms that aim to mitigate Jenny’s risks are not in plain language and the fact, nature and effect of these terms are not drawn to the attention of the consumer in a conspicuous manner and form it can be argued that these terms are unfair, unreasonable or unjust.

Should it be found that the standard terms of sale are in contravention of the CPA, it is possible for a Court to declare an entire contract between Jenny and the consumer void.

The best way forward

Our contract and commercial transaction specialists are constantly updating and improving on the documents available on the DocNinja system. They ensure that the consumer-facing documents are in plain and understandable language and they also make sure that any terms and conditions that need to be brought to the attention of the consumer are done in a way that satisfies the requirements of the CPA.

By signing up for one of our packages you will be able to generate consumer-facing agreements tailored to your need. And if you need any further assistance, remember that our paid packages include free document review by one of our corporate and commercial law specialists.

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