When is there a cooling-off period after a sale; allowing a purchaser to have second thoughts?

Consumer Protection Act

The Consumer Protection Act (CPA) provides for a cooling-off period if a transaction results from direct marketing, allowing a purchaser to get out of a sale agreement. It is often mistakenly thought that this applies to all transactions where the CPA applies. This is not so.

Section 16 of the Consumer Protection Act says:

A consumer may rescind a transaction resulting from any direct marketing without reason or penalty, by notice to the supplier in writing …, within five business days after the later of the date on which

  1. The transaction or agreement was concluded; or
  2. The goods that were the subject of the transaction were delivered to the consumer.

What is direct marketing?

The Act defines direct marketing as follows:

“direct marketing” means to approach a person, either in person or by mail or electronic communication, for the direct or indirect purpose of-

   (a)   promoting or offering to supply, in the ordinary course of business, any goods or services to the person; or

   (b)   requesting the person to make a donation of any kind for any reason;

 This means that if you conclude a transaction for the supply of goods or services in response to an unsolicited offer made to you in person, or by telephone or by email, you can get out of the transaction within five business days.

The “cooling-off” period does not apply to sales that result from any other form of marketing such as conventional print advertising or any transaction concluded when a customer buys goods in a shop.

How can you get out of the transaction?

You can do this by without reason and without having to pay a penalty, by simply giving notice to the supplier in writing, or in another recorded manner and form.

You must give the notice within five business days after the date on which-

(a)   the transaction or agreement was concluded; or

(b)   the goods were delivered;

whichever is the later date.

Cooling-off period when buying certain residential property

Under the Alienation of Land Act, residential property transactions for R 250 000.00 or less are also subject to a “cooling-off” period of five working days. This does not apply to residential properties sold for more than R 250 000.00. This provision remains in place and is not affected by the CPA.

Section 29A of the Alienation of Land Act says that a purchaser may revoke the offer to buy the land or the deed of sale within five days after signing the offer or deed of sale personally or through an authorized agent acting on written authority.

The written notice to revoke must be signed personally or by an authorized agent and must be unconditional.

Where an offer is revoked or deed of sale is terminated within the cooling-off period, every person who received any amount from the purchaser or prospective purchaser in respect of the offer or sale, shall refund the full amount of such payment to the purchaser within ten days of the date on which the notice to revoke was delivered to the seller or his or her agent.

This article is a general information sheet and should not be used or relied on as legal advice. Always contact your legal adviser for specific and detailed advice.