Tanzania’s Requirement to Register Standard Form Consumer Contracts with the Fair Competition Commission

The Standard Form (Consumer Contracts) Regulations, 2014 (the SFCC Regulations), were enacted under the Fair Competition Act Chapter 285 Revised Edition 2023 and published on 29 August 2014.

Subsequently, on 27 August 2020, the Fair Competition Commission (FCC) issued a notice to service providers, the business community, and the public outlining the requirement to register Standard Form Consumer Contracts (SFCCs) with the FCC, the procedure for filing complaints and objections with the FCC, and the consequences of non-compliance (the Notice). This briefing provides an analysis of the Notice as set out under the SFCC Regulations.

Definition and Scope of SFCCs

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.

It is worth noting that the SFCC Regulations do not apply to all contracts. They exclude contractual terms relating to succession and family matters, industrial relations and collective bargaining agreements between employers and employees, as well as Business-to-Business (B2B) standard contracts.

Preparation of standard contractual terms

A producer may develop a set of standard contractual terms applicable to their field of trade to promote good business practices and prevent the use of unfair terms. The producer must ensure that the SFCC is drafted in plain and easily understandable language. In the event of any ambiguity, the interpretation most favourable to the consumer shall prevail. 

Incorporation of standard business terms in the contract

Where the contractual terms are individually negotiated between the parties, such terms cannot be regarded as part of the standard business terms. Under the SFCC Regulations, standard terms may be incorporated into a contract only if the producer expressly informs the consumer of their existence.

If a  contract is concluded in a manner that makes it difficult to draw attention to those terms, the producer must take appropriate steps to ensure the consumer is made aware of them. This includes displaying clear and visible notices at the place where the contract is concluded. Additionally, the producer must provide the consumer with a reasonable opportunity to understand the contents of the contract, considering any physical disabilities the consumer may have.

Specifications of the SFCC

To ensure compliance with the SFCC Regulations, a SFCC must include the key provisions prescribed under the SFCC Regulations. The SFCC should clearly set out the respective obligations of both the producer and the consumer in relation to the goods or services provided and received.

With respect to the producer, the SFCC must specify details regarding the nature of the goods or services, the methods of advertising and offering them, and the manner in which the SFCC is to be executed.

On the part of the consumer, the SFCC must outline the consumer’s obligations, including the duty to pay for goods supplied or services rendered.

Additionally, the SFCC must clearly state the procedures applicable upon termination, renewal, or expiry of the SFCC, as well as provide the producer’s key contact details. Where a product may pose potential harm to the consumer, the SFCC must be accompanied by clear guidelines on its appropriate and safe use, in accordance with the SFCC Regulations.

Submission of SFCC for registration and review

Pursuant to the SFCC Regulations and the Notice, service providers and the business community must submit a SFCC currently in use to the FCC for review and registration.

Registration

Any person intending to use a SFCC is required to apply for its registration at least 21 days prior to the conclusion of the contract. The application must be submitted using a prescribed form, accompanied by a non-refundable fee determined based on the ‘capital value’ of the applicant.

Under the SFCC Regulations, ‘capital value’ refers to the total worth of a company or business undertaking. The registration fee is payable once every three years and must be paid in Tanzanian shillings.

Thereafter, the FCC will endorse the date and time of receipt of the SFCC and record the relevant particulars for purposes of review and registration.

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.

Approval and non-approval of standard business terms in a contract

The FCC may approve or refuse to approve the standard business terms contained in a submitted contract. Approval will be withheld if the terms fail to meet the specific requirements applicable to that contract or if they are inconsistent with the provisions of any written law.

Where the FCC refuses to approve the standard business terms, it must notify the applicant of its decision and provide reasons for the refusal within 21 days. If the FCC approves the standard business terms, it will issue a certificate of approval accordingly.

Unfair Terms

Under the SFCC Regulations, 'unfair terms' are terms in a contractual contract which, among other things:

(a)    cause a significant imbalance in the parties’ rights and obligations arising under the SFCC;
(b)    are not reasonably necessary to protect the legitimate interests of the producer; and
(c)    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 the prescribed form together with payment of the prescribed fee. This process applies to contracts that have already been approved or reviewed by the FCC.

Complaints and objections

The Notice provides that all complaints and objections relating to a SFCC must be filed with the FCC. Any person may lodge a complaint against a producer by completing the prescribed Form and submitting it to the FCC. The FCC will not entertain any complaint that is pending before another competent authority or that has already been determined. Where the FCC determines that it lacks jurisdiction, it must return the complaint to the complainant within 14 days from the date of receipt.

The FCC is required to consider all complaints submitted to it but may dismiss any that it deems frivolous or vexatious. Once a valid complaint is filed, the FCC must notify the producer using a prescribed form, and the producer is required to respond within 7 days of receipt. Upon receiving the producer’s response, the FCC must determine the complaint within 21 days. Any person aggrieved by the FCC’s decision may appeal to the Fair Competition Tribunal within 28 days from the date of the decision.

Penalties for infringement of a SFCC

As reiterated in the Notice, any infringement relating to the use of a SFCC is subject to penalties under the law. A person or body corporate that fails to submit an SFCC for registration, review, amendment, or replacement commits an offence and, upon conviction, is liable to a monetary fine as set out in the SFCC Regulations.