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IS THERE A DUTY ON A LANDLORD TO EXPLAIN LEASE TERMS TO A NEW TENANT?

Landlords are often faced with new tenants, who are signing leases for the first time, or tenants who are foreign nationals, with little apparent knowledge of English. The question is then sometimes asked as to whether there is a legal duty on the landlord to ensure that the tenant understands all the terms as set out in the lease agreement. In other words, if the landlord fails to explain the lease terms to the tenant, can the tenant deny that he is liable to properly perform his lease obligations, due to the fact that he did not understand what he was signing?

The basic principle in our law of contracts, governing this question, is known as “caveat subscriptor”, which means “let the signatory beware”. Our courts have held that “a person who signs a contract is taken to be bound by the ordinary meaning and effect of the words which appear over his signature”. Therefore, if a person signs a contract, the other party to that contract may accept that the person has read and understood its terms, and that he deems himself to be bound thereby, even if he has not done so. This also extends to unseen terms: where the signed contract refers to a separate document containing further terms, the duty is on the person signing the contract to ensure that he has read and understood those further terms.

The second relevant principle is the so-called “doctrine of quasi-mutual assent”, which holds that, where a party to a contract acts in such a manner that the other party reasonably assumes that that person deems himself to be bound to the contract terms, he is indeed so bound, even though he did not intend to bind himself. As an example, where a tenant complies with his lease obligations for two years, he cannot later on turn around and say that he was never bound to the lease on the basis of not understanding the lease terms – he had complied with those terms for two years, and the landlord may therefore assume that the tenant deems himself to be bound to the contract.

The final applicable principle is the provisions of the Consumer Protection Act, 68 of 2008. This act of course only applies if the tenant is a consumer as defined in the Act, i.e. a natural person or a juristic entity such as a company, with an annual turnover or net asset value below R2 million, at the time that the agreement is concluded. In terms of section 50 of the Act, read together with section 22, any written agreement between a supplier and a consumer must be in plain language which the average tenant with average literacy skills and with minimal skills as a consumer, can reasonably be expected to understand. Therefore, even in terms of the Consumer Protection Act, there is no duty on a landlord to explain the lease terms to a new tenant, as long as the lease is in understandable language.

There are, of course, exceptions to this rule, the most important of which would be misrepresentation. If, during lease negotiations, the landlord says to the tenant that rentals may be paid by the 21st day of the month, but the written lease provides that rentals are to be paid on the first day, the tenant may be able to make out a case that he is not obliged to pay on the first day, but only on the 21st day, as the payment date was misrepresented to him, and such misrepresentation induced him to sign the contract. Such misrepresentation is, however, extremely difficult to prove, and in our firm we have never come across a tenant who had successfully relied on this defence. Landlords should, however, be careful not to make any representations to tenants during the negotiation phase, if those representations are contradictory to what has been stated in the lease agreement.

Where a landlord does explain the lease terms, he cannot be faulted for that conduct, but care should then be taken to ensure that the lease terms are explained properly and faithfully, and that no misrepresentations are created as to what the terms actually mean.

Therefore, in general, there is no duty on a landlord to explain any lease terms to a new tenant, and the landlord may accept that the tenant has understood the terms he signed for, and the tenant will be bound to the lease which he duly signed.

SA Branch Phone: +27 (0)21 914 0513
Namibia Branch Phone: +264 (0)81 143 6980
SA Branch: Ben Groot Attorneys Inc (2012/051739/21)
Namibia Branch: Michelle Saaiman Inc (2017/1088)