Before You Sign a Contract
Updated: 4 days ago
Know what to check before you agree to a contract.
Whether you are joining a gym, signing a lease, buying a cellphone on contract or paying someone to perform a service, take time to understand what you are agreeing to. A contract can create obligations for both you and the other party, and a misunderstanding at the beginning can become a costly problem later.
Do not assume that an agreement has no legal effect simply because you made it online or did not sign a paper document. Electronic agreements can have legal effect, although particular types of agreements may have additional legal requirements.
Seven things to check before you agree
Who are you entering into the contract with? Check the name and contact details of the person or business. If you are dealing with a business, make sure you know who will be responsible for supplying the goods or services and who you should contact if there is a problem.
What is each party agreeing to do? Check that the contract clearly describes what you will receive and what you must do in return. If you are paying for a service, look for details about the work, what is excluded and when it should be completed.
What will it really cost? Check the total price, deposit, instalments, once-off fees and any extra charges. If you are borrowing money under a credit agreement covered by the National Credit Act, the credit provider must give you prescribed information and a quotation before you enter into the agreement. Read these documents carefully so that you understand the cost of the credit.
How long will the agreement last? Look for the start and end dates. Check whether the contract renews automatically, whether the price can change and whether you must give notice before it ends.
How can you cancel it? Find out what you must do to cancel, how much notice is required and whether a cancellation charge may apply. Do not assume that every contract comes with a cooling-off period. Cancellation rights depend on the type of agreement and the circumstances in which it was concluded. Some consumer contracts have specific statutory protections.
What happens if something goes wrong? Look for terms about late payment, delays, defective goods, poor service and disputes. Pay particular attention to clauses that limit the other party’s responsibility or require you to accept a risk. Where the Consumer Protection Act applies, it regulates unfair contract terms and requires certain risk and liability provisions to be brought to the consumer’s attention.
Does the contract match what you were promised? If someone offered you a discount, a particular service or a different payment arrangement, check that it is recorded in the final agreement. Ask for agreed changes to be made before you sign.
What if you do not understand a clause?
Ask the other party to explain it in plain language. You can also ask for time to read the contract or have someone you trust help you understand it.
Do not feel obliged to sign immediately because someone tells you that the wording is “standard”. Where the Consumer Protection Act applies, it includes protections relating to plain and understandable language and unfair terms, but not every difficult-to-understand clause is automatically unlawful.
If a clause could have serious financial or legal consequences and you are still unsure what it means, consider obtaining legal advice before agreeing.
A few practical precautions
Read the whole agreement, including schedules and terms linked from an online form. Check that important spaces have been completed and that any changes you agreed on appear in the final version. Keep a complete copy of the contract, along with relevant quotations, receipts and messages.
Be cautious if someone pressures you to sign immediately, discourages you from reading the terms or refuses to give you a copy. These are good reasons to slow down and ask questions.
What if you have already signed?
Start by reading the agreement again, particularly the terms about cancellation, complaints and disputes. Keep records of what happened and of your communications with the other party. Do not simply stop paying or ignore your obligations without understanding the possible consequences.
If your concern involves a consumer transaction, you can consult the National Consumer Commission’s guidance on lodging a complaint. If you need advice about your particular situation, Legal Aid South Africa also provides a legal advice service.
Before you sign, remember:
Read the terms. Ask questions. Keep a copy.
Official resources and further reading
Consumer Protection Act 68 of 2008: Consumer protections that may apply to the terms of a contract.
National Credit Regulator’s guide to the National Credit Act: Information about credit agreements and their costs.
National Consumer Commission: Complaints: Guidance on lodging consumer complaints.
Legal Aid South Africa: Legal Advice: Information about accessing legal advice.
Disclaimer: This article provides general information about South African law and does not constitute legal advice. The information may not apply to your particular circumstances. If you need advice about your situation, consult a qualified legal practitioner or an appropriate legal advice service.
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