On 27 August 2020, the Fair Competition Commission (the FCC) issued a reminder notice (the Notice) on the regulation of Standard Form Consumer Contracts (SFCC) in Tanzania. In this article, we explore the contents of the Notice as provided under the Standard Form (Consumer Contracts) Regulations of 2014 and how this will affect all service providers, business community and the general public.
The SFCC Regulations define a SFCC as an agreement that contains standardised and non-negotiable terms and conditions. This agreement is prepared by a party in a pre-printed form which is to be signed by a consumer. The party preparing the SFCC is known as the producer and includes manufacturers, suppliers, sellers, service providers and operators. A consumer is defined under the SFCC Regulations as any person who purchases or offers to purchase goods or services otherwise than for the purpose of resale but does not include a person who purchases any goods or services for the purpose of using them in the production or manufacture of any goods or articles for sale.
Submission of SFCC for registration and review
The Notice states that service providers and the business community must submit a SFCC currently in use for registration and review by the FCC.
Any person who uses a SFCC must apply for registration within 21 days before the conclusion of the contract. The application is made using SFC Form No. 1 and the applicant must pay a non-refundable fee rated depending on the capital value. Capital value is defined under the SFCC Regulations as the total worth of a company or business undertaking. The fee is paid once for a period of 3 years in Tanzanian shillings (TZS) as listed below:
- TZS 15,000 for capital below TZS 5 million;
- TZS 30,000 for capital between TZS 5.1 million and 10 million;
- TZS 50,000 for capital between TZS 10.1 million and 100 million;
- TZS 200,000 for capital between TZS 101 million and 500 million; and
- TZS 300,000 for capital of TZS 501 million and above.
Thereafter, the FCC will endorse the date and time of receipt of the SFCC and record the necessary particulars for registration and review.
Review of a SFCC is done by a division responsible for consumer protection (the Division). The Division is required to review a SFCC within 14 days from the date it was received. The Division may recommend appropriate measures for the applicant to take, such as the removal, amendment or replacement of unfair terms. The FCC must complete the review process within 21 days and register the SFCC.
Under the SFCC Regulations, 'unfair terms' are contractual terms which, among other things:
- cause a significant imbalance in the parties’ rights and obligations arising under the SFCC;
- are not reasonably necessary to protect the legitimate interests of the producer; and
- cause a financial or non-financial detriment to a consumer.
An unfair term in a SFCC concluded with a consumer by a producer will be void to the extent of the unfair term. The SFCC that contains the unfair term will continue to bind the parties if it is capable of continuing in existence after the exclusion of the unfair term.
Amendment and replacement
An application for amendment or replacement of a SFCC is made by using SFC Form No. 5 together with payment of the prescribed fee below:
- TZS 10,000 for capital below TZS 5 million;
- TZS 20,000 for capital between TZS 5.1 million and 10 million;
- TZS 40,000 for capital between TZS 10.1 million and 100 million;
- TZS 100,000 for capital between TZS 101 million and 500 million; and
- TZS 200,000 for capital of TZS 501 million and above.
Complaints and objections
The Notice instructs that complaints and objections against a SFCC must be filed with the FCC. Any person may lodge a complaint against a producer by filling the prescribed form SFC 2 and submitting it to the FCC. The FCC shall not entertain a complaint which is pending before any competent authority or which has been previously determined. The FCC is required to return a complaint to the complainant within 14 days from the date of receipt once it discovers that it lacks jurisdiction to entertain such a complaint.
Once a complaint is filed, the FCC is required to notify the producer on the same by using the prescribed form SFC 3. The producer must reply to the notice within 7 days from the date of receipt through the prescribed form SFC 4. The FCC is required to determine the complaint within 21 days from the date it received the producer’s reply. Any person who is aggrieved by the decision of the FCC may appeal to the Fair Competition Tribunal (the FCT) within 28 days from the date of the decision of the FCC.
Penalties for infringement of a SFCC
As reminded in the Notice, any infringement in the use of a SFCC shall be penalised according to the law. A person who fails to submit a SFCC for registration, review, amendment or replacement commits an offence and is liable, on conviction, to a fine between TZS 500,000 and TZS 2 million. The fine for a body corporate is between TZS 3 million and TZS 5 million For general offences, a person shall be liable to a fine between TZS 300,000 and TZS 5 million.