An Overview of the new Consumer Protection Act

The Act

The Consumer Protection Act (“CPA”) came into effect on 1 April 2011 and consists of 122 sections (amounting to 93 pages, including schedules) together with the Regulations to the CPA containing a further 44 sections (amounting to 85 pages, including annexures). The CPA is probably one of the most important pieces of legislation recently enacted and changes the playing fields between consumers and suppliers considerably. Yet, the legislation is cumbersome and not “consumer-friendly” when attempting to familiarise oneself with the provisions. The CPA will profoundly change the content and format of a supplier’s terms and conditions and all suppliers are strongly advised to ensure that their standard terms and conditions comply with the CPA.

This is a series of articles on the Consumer Protection Act, covering the CPA more or less in accordance with the sequence of the relevant sections. The first article will deal primarily with Sections 1 – 19.

Application of the Act

The CPA applies to most transactions performed in the ordinary course of business (therefore, transactions that are for example excluded would be a private sale of a motor vehicle or used household goods) where the goods and services are offered for a consideration (monetary or in return for labour, although not in an employment context, barter, other goods or services, coupons or loyalty credits or any other value given and accepted in exchange for the goods or services).

The CPA does not apply to inter alia the following transactions:

  • where the consumer is a juristic person with a turnover or asset value of more than R 2,000,000.00 per year;
  • where the State is the supplier;
  • where the provision of goods and services has been exempted by the Minister of Trade and Industry;
  • where the transaction is a credit agreement which falls under the National Credit Act (although the CPA still applies to the goods or services that are subject to the credit agreement);
  • where the goods and services are subject to an employment relationship or are governed by a collective agreement.

 The CPA will only apply to insurance contracts as from 1 October 2012.

Discriminatory and unsolicited marketing

The CPA protects the consumer against discriminatory marketing and unwanted direct marketing. For example, the consumer can enter his details in a registry, serving as a pre-emptive block either generally or for specific purposes against any communication that is primarily for the purpose of direct marketing. This registry has, however, not yet been established.

Cancellation of Fixed term contracts and penalties

Fixed term contracts, such as for example cellphone contracts, can now in be cancelled by giving the supplier 20 business days’ notice in writing (or other recorded manner or form). The supplier is entitled to impose a reasonable cancellation penalty although it appears that the reasonableness of such penalty will have to be in line with the CPA (it has to be seen how this provision will be interpreted by the consumer tribunal but guidance may be available from how the CPA deals with charges which a supplier may impose on the return of goods before the consumer is refunded with the purchase price). This cancellation option does not, however, apply to transactions between juristic persons regardless of their annual turnover or asset value. The fixed term contracts should generally be no more than two years as set out in the Regulations to the CPA.

Repairs

Repairs above Rand 1.00, where the service provider has or takes possession of the consumer’s property for purposes of effecting the repairs or where the consumer specifically requests an estimate before any services or goods are supplied, must be pre-authorised by the consumer. The consumer needs to be informed of an estimate, unless the consumer in writing or in another recorded manner declines to receive an estimate or pre-authorises any charges subject to a maximum amount and the charge does not exceed that maximum. No costs for the preparation of an estimate can be charged, unless the price of such estimate has been disclosed to and approved by the consumer. Should the costs for such goods or services exceed the estimate, such additional charges will only be recovered if the consumer was informed of the additional estimated charges and the consumer has authorised the supplier to continue with the repairs.

Cooling off period and cancellation of advance bookings and orders

In the case where goods are directly marketed to the consumer, a cooling off period of five business days applies without the supplier being able to charge a reasonable penalty. The cancellation option also applies to advance bookings or orders but the supplier may impose a reasonable cancellation charge. Such charge would have to be reasonable with reference to the nature of the goods or services reserved the length of the notice of cancellation and the potential of finding an alternative consumer and any applicable general practice of the relevant industry.

Examination of goods and delivery dates and times

The consumer is also entitled to examine the goods upon delivery to the extent possible and if the location, date or time of the delivery of the goods or performance of any service differ from what has been agreed with the consumer, the consumer may either accept delivery, require delivery to be performed in terms of the agreed framework or cancel the agreement without penalty (this section is, however, not applicable to franchise agreements). Suppliers are cautioned to ensure that any changes in the proposed date, time and place of delivery are confirmed in writing with the consumer and that in the case of delays experienced, such delays are communicated timeously and that new timeframes are agreed upon.

The risk in the goods also only pass to the consumer once the latter has accepted delivery.

Disclaimer: Although Hildebrand Attorneys is committed to furnishing reliable and accurate information, this article is intended as a general reference guide only and does not constitute legal advice. Hildebrand Attorneys cannot take any responsibility for the accuracy or currency of the information and if you require particular information you are advised to consult with the article’s author or a qualified legal authority. This article may not be reproduced without the express written permission of the author and Hildebrand Attorneys accepts no responsibility for any loss or damage that may be occasioned as a result of the reliance by any person on the information contained herein

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