Who the fixed-term rules protect
Subscriptions, service plans, gym memberships and other fixed-term consumer agreements carry special rules under section 14 — but only for individual consumers. The section opens by excluding business-to-business contracts entirely.
“This section does not apply to transactions between juristic persons regardless of their annual turnover or asset value.”
So a fixed-term supply contract between two companies is governed by ordinary contract law; a fixed-term contract aimed at members of the public must build in the protections below.
There is a second gate: section 14 only bites if the CPA applies to the agreement at all — the supplier must be acting in the ordinary course of business. The Supreme Court of Appeal made the point in 2025, when a tenant tried to use section 14’s termination protections against owners who had let out their own family home while emigrating.
Els v Venter and Another
“It follows that the appellant’s reliance on s 14(2)(b)(ii) of the Act is misplaced. In any event, the second lease is not a fixed-term agreement as envisaged in the Act… The tenure of the second lease is 36 months, which is destructive of the appellant’s reliance on s 14(2)(b) of the Act. Aside from this, the second lease is not a ‘consumer agreement’ as defined in the Act.”
Note — The lessors were private individuals letting their home once, pending its sale — not a letting business — so the Act did not apply and the tenant could not resist a contractual three-month termination notice with section 14. The Court added a second, independent point: at 36 months the lease exceeded the 24-month maximum in regulation 5(1), so it was not a fixed-term consumer agreement as envisaged in the Act in any event.
The 24-month maximum (regulation 5)
Section 14(2)(a) says a fixed term must not exceed the maximum prescribed by the Minister, and section 14(4)(a) empowers that prescription. Regulation 5 sets the figure at 24 months.
“For purposes of section 14(4)(a) of the Act, the maximum period of a fixed-term consumer agreement is 24 months from the date of signature by the consumer— (a) unless such longer period is expressly agreed with the consumer and the supplier can show a demonstrable financial benefit to the consumer; (b) unless differently provided for by regulation in respect of a specific type of agreement, type of consumer, sector or industry; or (c) as provided for in an industry code contemplated in section 82 of the Act…”
A longer lock-in is only valid if the consumer expressly agrees and the supplier can show a real, demonstrable financial benefit to the consumer for the extension — not merely a benefit to the supplier.
Cancelling early — 20 business days
The defining feature of the regime is that the consumer can always walk away. Despite anything to the contrary in the agreement, the consumer may cancel at expiry without penalty, or at any other time on 20 business days’ notice.
“despite any provision of the consumer agreement to the contrary— (i) the consumer may cancel that agreement— (aa) upon the expiry of its fixed term, without penalty or charge, but subject to subsection (3)(a); or (bb) at any other time, by giving the supplier 20 business days’ notice in writing or other recorded manner and form, subject to subsection (3)(a) and (b)…”
A “no cancellation” clause cannot defeat this right. The supplier’s own right to cancel is narrower — it arises only on 20 business days’ notice of a material, unremedied breach by the consumer.
The pre-expiry notice and the roll-over
Auto-renewal onto a fresh fixed term is exactly what section 14 prevents. The supplier must first send a pre-expiry notice in a defined window, and the default outcome on expiry is a month-to-month continuation.
“(c) of not more than 80, nor less than 40, business days before the expiry date of the fixed term… the supplier must notify the consumer in writing… of the impending expiry date, including a notice of— (i) any material changes…; and (ii) the options available to the consumer…; and (d) on the expiry of the fixed term… it will be automatically continued on a month-to-month basis… unless the consumer expressly— (i) directs the supplier to terminate the agreement on the expiry date; or (ii) agrees to a renewal of the agreement for a further fixed term.”
So an “automatically renews for another year unless cancelled” clause will not hold against an individual consumer. If nothing is done, the contract simply continues month-to-month, which the consumer can then end on the ordinary notice.
Reasonable cancellation penalties
Early cancellation is not necessarily free. On cancellation the consumer remains liable for amounts owed up to that date, and section 14(3) lets the supplier impose a reasonable cancellation penalty for goods, services or discounts granted in contemplation of the full term.
“Upon cancellation of a consumer agreement… (a) the consumer remains liable to the supplier for any amounts owed to the supplier in terms of that agreement up to the date of cancellation; and (b) the supplier— (i) may impose a reasonable cancellation penalty with respect to any goods supplied, services provided, or discounts granted, to the consumer in contemplation of the agreement enduring for its intended fixed term, if any…”
Regulation 5(2) lists the factors that make a charge “reasonable” (amounts still owed, the value of goods kept or returned, the original duration, and losses or benefits to the consumer). But there is an outer limit: the penalty may not be so large that it cancels the right to cancel.
“Notwithstanding subregulation (2) above, the supplier may not charge a charge which would have the effect of negating the consumer’s right to cancel a fixed term consumer agreement as afforded to the consumer by the Act.”
For change-of-mind on a once-off booking or order rather than a fixed-term subscription, the separate cancellation regime in section 17 applies — see cooling-off and cancellation.