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The president recently signed the new Consumer Protection Act into law (24 April 2009 to be exact). This kicked off a 12-month period during which the act will be implemented. The following is a brief outline of the aims and purposes of the Act as well as some sections that shall change the way on how businesses interact with consumers in the near future.

 

The aim of the Act is to achieve a consumer market that is fair, accessible, efficient, sustainable, and responsible for the benefit of Consumers generally; to create certain actions for consumers for various types of damages based on the turnover of any supplier; to provide consumer education and improved access to information in order for consumers to make fair choices; and to codify all the statutory and common law provisions that provided protection for purchasers of goods.

 

The purposes of the Act are to protect the consumer from abuse and exploitation in the marketplace and to prohibit certain unfair marketing and business practices.

 

It introduces a formal set of consumer rights into our law, so as to achieve these aims and purposes.

 

When and to whom the Act applies (the scope of the Act):

The Act applies to all goods and services delivered or rendered “in the ordinary course of business” and applies to all transactions occurring within the Republic. ‘Transaction’, in this context means any agreement between persons (viz. natural and juristic persons, like companies or trusts) for the supply of any goods or services for a consideration occurring within the Republic.

 

There are a few transactions that are excluded however, such as: a transaction in terms of which goods and services are promoted to the State, or are supplied to or at the direction of the State; if the value of the transaction exceeds the threshold value determined by the Minster; credit agreements falling under the scope of the National Credit Act; and any form of employment contract.

 

Furthermore, the Act extends the ordinary definition of ‘consumer’ to include not only the person who purchases an item, but also to all of those who make use of the item, or benefit from it. In terms of the Act any one of those people are able to make use of the avenues created by the Act.

 

Certain aspects of the Act which create rights and obligations that have not previously existed:

 

S8 of the Act lays down a number of consumer equality rights. According to this section a supplier cannot charge different prices to persons or category of persons. Furthermore a consumer has the right to cancel any advanced booking, reservation or order for any goods or services to be supplied.

 

S14 provides for the cancellation of fixed term agreements and the termination of renewal provisions of such agreements. What is sought to be achieved is that all consumers could not be held to an agreement for a fixed term against their will. It allows the consumer to cancel on giving the supplier twenty business days written warning. The above is however subject to S14(a) and (b). S14(2)(a) provides that the consumer remains liable for any amounts owed to the supplier in terms of the agreement up until the date of cancellation. S14(2)(b) provides that the supplier may impose a reasonable cancellation penalty on the consumer.

 

S14(2)(c) and (d) provide that a fixed term agreement does not automatically terminate upon the expiry date, yet rather that the supplier needs notify the consumer of the impending expiry date and the consumer has the right to continue the agreement on a month to month basis.

 

S16 deals with the redress in the context of direct marketing. It allows the consumer an absolute right, without penalty, to terminate transactions resulting from direct marketing by notifying the Supplier within 5 business days from the date on which the goods were delivered.

 

S18 provides that consumers have the right to examine goods without the responsibility for any loss or damage to any goods displayed by the Supplier, unless such damage is a result of gross negligence or criminal conduct.

S21 provides that any person in possession of unsolicited goods may either retain the goods and have full ownership, or may return the goods to the supplier at the expense of the supplier.

 

S47 deals with over-selling or booking and provides for the following remedies: If a supplier is unable to honour a commitment towards a consumer, the consumer is entitled to a refund and can claim consequential damages. The following defenses are available to the supplier: that the supplier offers comparable goods or services and the consumer unreasonably refuses; or that the shortage of stock is beyond the Suppliers control and the supplier takes reasonable steps to inform the Consumer thereof.

 

S 61 allows the consumer to sue anybody within the supply chain (viz. producer, distributor, importer etc.) for any harm (including economic loss) occasioned by the supply of unsafe goods, product failure, defect or hazard or a failure to give sufficient instructions regarding any potential hazard.

 

A supplier may attempt to vary or waive the above mentioned consumers rights, under S49 yet it must be explicitly highlighted in a plain language notice

 

If there is any conflict between the Act and any other law that protects consumers then the laws must either be enforced concurrently or that which provides greater consumer protection must be used.

 

The Act sets up a commission and a tribunal to enforce consumer rights as well as to hear complaints. They are entitled to impose an administrative fine in respect of any prohibited conduct to the amount of ten percent of their annual turnover or one million rand (whichever the greater). The person convicted can be fined or imprisoned.

 

When drafting commercial and standard contracts, it is imperative that the contracts are in line with the Act in order to avoid undesirable consequences.

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delport ward & pienaar

attorneys, notaries &  conveyancers
1st floor - cornerstone house

16 loop street

cape town

8001

 

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+27-21-419.3733

 

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+27-21-419.3743

 

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+852-8139.7374

 

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