Legal Articles

The cancellation of contracts forms the bulk of disputes between many parties. This is obviously because where cancellation of a contract happens, it is usually as a result of dissatisfaction, breach, inconvenience, or frustration, otherwise without such the contract will be allowed to run its course and lapse at the appointed time or even be renewed.

Most contracts have provisions to cater for cancellation of the contract by the incidence of an event before the lapse of the natural term of the agreement. This is done to make provision for unforeseen future circumstances which may require that the obligations under a contract come to an end before their natural lapse.

CPA Cancellation of Lease Agreement

With regards to Lease Agreements, the Consumer Protection Act 68 of 200 (CPA) has provisions to regulate early cancellation. Early cancellation is whereby the tenant, or the landlord decides to terminate the Lease Agreement before its natural term ends, owing to one or more reasons.

For example, a tenant may decide to terminate a 24-month Lease Agreement just 6 months down the line. Terminating a Lease Agreement must however be done in a way and manner that conforms to the provisions of the agreement itself and the CPA so as not to complicate things and have disputes which sometimes end up in Courts or the Housing Tribunal.

The first key principle that must be noted is that, because the Landlord or their Agent rest on the premise that the Tenant will be occupying and paying for the property for as long as the Lease Agreement subsists, it therefore means that an abrupt end to such occupancy and payment will have financial implications for the Agent and Landlord.

On the other hand, in the event where the Landlord demands that the Tenant vacates the property without sufficient notice, it will cause considerable inconvenience to the Tenant as they will likely not find a suitable place to occupy under such urgency.

Therefore, any cancellation of a lease prior to its natural term must be done on ample and adequate notice so that the affected party will make necessary arrangements in time. If the Landlord early terminates the lease, the notice will allow the Tenant to find alternative accommodation.

If the Tenant is the one that cancels, then the Landlord will have ample opportunity to find another Tenant so that the property will not stay vacant and not generate any income.

The second key principle is that where the Tenant terminates the lease early, there may be attendant financial implications that accrue. For example, the Agent or Landlord may incur costs to advertise the property and have another contract signed. Under normal circumstances this is usually done once per each rental cycle.

However, if the Tenant terminates way before the Landlord or Agent anticipates another rental cycle, this may mean extra costs for the Landlord once more. If the Tenant decides to move out just 3 months into the lease, this means the Landlord now has to advertise the property again immediately, something which the Landlord would have been required to do after a year when the lease would have come to its contractual end.

Therefore, the CPA allows for such as reasonable penalty costs, but they must be proven and only claimed to the extent of actual loss.

Van Deventer & Van Deventer Incorporated – Property Law Attorneys in Cape Town and Johannesburg

At Van Deventer and Van Deventer Attorneys we strongly advise that parties consult with us in the event that they wish to cancel contracts, so that they manoeuvre possible traps that may complicate things and result in disputes.

We assist in a wide array of matters including all types of contracts and property law.

Contact us for an appointment and consultation with attorneys in our property department.

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