In light of the declaration of a state of national disaster due to the COVID-19 pandemic, there is a lot of uncertainty for suppliers and consumers. Businesses are under an enormous amount of stress, with respect to their potential, to uphold or accept any commitments for bookings for services or goods after the lockdown.
Consumers and suppliers could face the dilemma of being unable to commit to booking if the lockdown gets extended to a later date, or otherwise, suppliers could be tempted to overbook or oversell services/goods to compensate for their losses suffered.
Section 47 of the Consumer Protection Act addresses this, in the form of “overselling and overbooking”. Overselling or overbooking is the sale of goods or services in excess of a supplier’s actual supply. This is common practice in the airline and hotel industry, to allow for seats or rooms to still be filled, in the event of consumers being unable to make a flight or check in to hotel rooms.
Section 47 states that a supplier must not accept payment for any goods or services unless the supplier has a reasonable basis for believing that he or she will be able to supply those goods or provide those services. The supplier may not supply goods or services that are materially different from the goods or services paid for. A supplier must honour a commitment to supply goods or services on a specified date or at a specified time.[1]
If the supplier fails to provide goods or services or comparable goods or services, due to insufficient stock or capability to supply those goods or services, the supplier must refund to the consumer the amount paid. This amount will have to be paid, with interest and the supplier will have to compensate the consumer for costs directly incidental to the supplier’s breach of contract.
There is however a defence or remedy for suppliers. If the shortage of stock/services is due to circumstances beyond the supplies control and the supplier took reasonable steps to inform the consumer of the shortage of stock or capacity, as soon as it was practicable to do so in the circumstances, the supplier is liable only to refund (with interest) the consumer but not to compensate the consumer for directly incidental costs.
COVID-19 is unchartered waters, and could most likely be considered “circumstances beyond the supplier’s control” however, it will be important for suppliers accepting bookings for goods/services to have the necessary disclaimers in place, to address the circumstances should overselling or overbooking takes place.
The Consumer Goods and Services Ombudsman recently stated that consumers may not be charged a cancellation fee and be refused a refund irrespective of who initiates the cancellation.[2]
However, Section 47(4) of the Act does allow for the supplier to rely on a legal defence against a claim for a refund, if they make an alternative offer to satisfy the promise to deliver. The consumer has to consider and choose if they want to accept that offer, however, the consumer cannot act unreasonably in refusing to accept the offer.
ABOUT THE AUTHOR
Melindi Dean is a SEESA Consumer Protection & POPI legal advisor in Pretoria. She graduated from the University of South Africa with her LLB degree Cum Laude. She started her career at SEESA in 2018.
Bibliography:
- CONSUMER PROTECTION ACT 68 OF 2008
- Writer, S., 2020. Cancelling Bookings And Reservations Due To The Coronavirus – What South Africans Need To Know. [online] Businesstech.co.za. Available at: <https://businesstech.co.za/news/business/382923/cancelling-bookings-and-reservations-due-to-the-coronavirus-what-south-africans-need-to-know/> [Accessed 30 March 2020].
[1] Consumer Protection Act 68 of 2008. 47.
[2] S, 2020. Cancelling Bookings And Reservations Due To The Coronavirus – What South Africans Need To Know. [online] Businesstech.co.za.