The scope and validity of exemption clauses in South African law

Abstract

Exemption clauses are often incorporated in consumer agreements by suppliers to exclude or limit liability on the supplier’s part. Just like any other term in the agreement, an exemption clause will also be considered to be a reflection of the actual or presumed intentions of the parties and the courts must give effect to it. However, research reveals that the application of these clauses often operates in favour of the supplier and to the detriment of the other party, who is usually a consumer as defined by the Consumer Protection Act 68 of 2008 (hereafter CPA). This dissertation seeks to analyse the legal status of exemption clauses in South African consumer agreements, particularly unfair, unjust and unreasonable clauses. The research done indicates that courts have relied on several techniques, the most common one being the restrictive interpretation method which is used to limit the application of an exemption clause. It will also be shown that South African courts have also relied on public policy which now incorporates the values of the Constitution of the Republic of South Africa Act 108 of 1996 (hereafter Constitution) and would prevent certain exemption clauses from being enforced if they would result in injustice. Despite the application of these techniques, this research shows that challenges imposed by the use of exemption clauses continued to rise. The CPA was enacted with an aim to advance and protect consumers’ interests in the commercial industry. This dissertation will further explore how the CPA has ensured fairness in consumer agreements by introducing certain requirements for incorporating exemption clauses into consumer agreements. It will further be shown that the CPA strictly prohibits the use of certain exemption clauses in consumer agreements. The relevant provisions under Chapter 2 Part G of the CPA will be critically discussed The dissertation will also look at how English law has attempted to deal with the use and application of unfair and unjust exemption clauses. The significance of this part of the dissertation is to compare the techniques employed under English law with those employed in terms of South African law and make recommendations where possible. This will be done by analysing legislations of the UK, as well as legislation of the European Union, in particular, the 1993 EC Directive on Unfair Terms in Consumer Contracts as it has been incorporated under the UK law.