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Contract Terms and Consumers

By James M. Chalungumana

Many times, consumers encounter various writings in buses, trading places or on receipts enshrined in offer letters for loans or in insurance terms and conditions which have been accepted as normal trade terms and conditions. The texts take various forms such as ‘luggage and passengers carried at owners’ risk’ in buses and ‘20% charge on items returned for exchange or refund’ on receipts.

Others are hidden in documents where you are handed an offer letter for a loan and shown where to sign without being given the opportunity to read through the document. The client advisor verbally informs you that the monthly deduction for your loan would be K1,500.00 for a 24 months repayment period but then you notice that the deduction is K2,000.00 with hidden charges enshrined in the document that you did not have the opportunity to read.

Imagine attempting to buy furniture in a shop offering hire purchase and you are told its price is K2,400.00. You are asked to pay for it within 12 months and ordinarily you would expect to pay K200.00 as an equal monthly installment but when you are ready to check out with the item, you are informed that there is a membership fee, contract fee and delivery fee; all of which you were not informed about when you were undergoing the whole purchasing process.

All the above are illustrations of various unfair contract terms that consumers are subjected to. The main hallmarks of these contracts are that the terms have been offered to the consumer on a ‘take it or leave it’ basis and most consumers take it mainly because they need that loan, the furniture, television set or need to travel on that bus and do not question the traders in most instances.

Section 53 of the Competition and Consumer Protection Act no. 24 of 2010 (‘the Act’) regards a contract unfair if it causes a significant imbalance in the parties’ rights and obligations. It also voids a contract that is unfair or contains unfair terms and it is only after the unfair terms of a contract are removed can a contract between a consumer and an enterprise be binding.

The Act therefore makes it illegal to enforce a contract or any of its terms once it is determined that it is unfair, causes a significant difference in the parties’ rights and obligations and it is detrimental to the consumer. The contract shall only be legally binding if it is enforced without the unfair contract term. Consumers enter into contracts all the time when they buy any product, obtain a loan, buy an insurance policy, board a bus or taxi, pay for a service and engage in any transaction that includes offer, acceptance and consent.

Many consumers do not realise that they have entered into a contract in most instances and when they are faced with any of the above situations they often accept them as the legally binding way of doing business.

Consumers therefore need to be alert to such unfair contract terms, scrutinise the documents they are signing and examine the inscriptions on receipts and warranty/guarantee documents. Consumers can even ask to examine offer letters for loans, insurance policies and other such documents for hours or even days before signing them to ensure that they are not entering into an agreement that would significantly disadvantage them.

Consumers are encouraged to come forward to the Competition and Consumer Protection Commission (‘the Commission’) whenever they feel they have been subjected to an unfair contract or unfair contract term by an enterprise. The Commission will investigate the matter and appropriately determine whether the contract or any of its terms are unfair.

In instances where the Commission has found the Respondent liable, refunds have been recovered for Complainants with the contract only binding to both parties if it is capable of being enforced without the unfair term.

Traders have the obligation to ensure that their terms and conditions are transparent and clear. A term is transparent and clear if it is expressed in “reasonably plain language”, legible and clearly presented, and is readily available. Terms and conditions that are not transparent are potentially unfair as consumers may not be aware of their existence or effect. For instance, the example about hire purchase illustrated earlier in the article is one example of terms that are hidden or are not transparent.

Next time you feel that any agreement you are entering into as a consumer has clauses or terms and conditions that are unfair then you can visit any of our 10 offices in all the provinces where you will be assisted accordingly at no charge at all.

About CCPC

The Competition and Consumer Protection Commission (CCPC) is a statutory body established with a unique dual mandate to protect the competition process in the Zambian Economy and also to protect consumers.

Get in touch

Competition & Consumer Protection Commission
4th Floor Main Post Office Building
P.O Box 34919
+260 211 232657/222787

5678 Toll Free


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