WAT DOES THE ACT AIM TO ACHIEVE?
·
To
establishing a national benchmark for improved standards of consumer protection
·
To
create an organisational structure for consumer protection
·
To
promote the rights and protection of historically disadvantaged market
participants
WHEN DOES THE ACT COME INTO EFFECT?
·
The
CPA will come into operation on 24 October 2010, but the liability of all
suppliers of goods to pay damages caused by defective goods applies to any
goods that were first supplied to a consumer on or after 24 April 2010.
·
There
are currently no regulations (not even in draft form) for the Act. The
regulations, once published, may have additional implications for the suppliers
of goods and services.
SOME PRACTICAL IMPLICATIONS
·
Under
this Act South African consumers will be among the most protected
consumers in the world. For suppliers of goods or
services the Act entails onerous new obligations.
·
Trading
names will now have to be registered.
·
All
marketing campaigns aimed at consumers must be conducted in accordance with the
Act.
·
A
variety of new mechanisms will be put into effect to enable consumers to
enforce their rights.
·
No-fault
or strict liability for damage caused by defective goods will apply; and the
definitions of “goods” and “defect” and related concepts such as “unsafe” and
“hazard” are extremely wide.
·
Fixed term
agreements will be affected by the Act; and this will entail,
for instance, that customers must be given notice prior to the expiry of the
fixed term.
·
All
agreements affected by the Act must be in plain and understandable language.
Agreements (and also advertisements) will have to be wholly or partly re-drafted
to comply with the Act. Failure to do so may result in agreements being
unenforceable on the basis of unconscionable conduct by a supplier.
·
The
Act alters the common law to be more favourable to
consumers. By operation of law the consumer obtains various warranties and
indemnities. The warranties contained in the
agreement are no longer the only warranties that apply.
·
The
Act applies to the supply of services and a wide variety of goods, including
the supply of information. It does not apply to employment contracts. The
Act applies to franchise agreements: Franchisees qualify as consumers in terms
of the definition of “consumer”.
·
The
courts are given wide powers to come to the aid of consumers, including
power to rewrite contracts.
·
Courts
are required under the Act to interpret
standard form contracts in favour of consumers.
·
Promotional
competitions
will be governed by this Act, instead of by the Lotteries
Act. Requirements include the obligation to prepare competition rules
before the competition.
SOME IMPORTANT SECTIONS:
APPLICATION OF THE ACT
·
The
CPA has a very wide reach and applies to every “transaction” occurring within
the Republic, with certain exclusions:
'transaction' means-
(a) in respect of a
person acting in the ordinary course of business-
(i)
an agreement between or among that person and one or more other persons for the
supply or potential supply of any goods or services in exchange for
consideration; or
(ii)
the supply by that person of any goods to or at the direction of a consumer for
consideration; or
(iii)
the performance by, or at the direction of, that person of any services for or
at the direction of a consumer for consideration; or
(b)
an interaction contemplated in section 5 (6), irrespective of whether it falls
within paragraph (a);
Application - 5(1) This Act applies to-
(a)
every transaction occurring within the Republic, unless it is exempted by
subsection (2), or in terms of subsections (3) and (4);
(b)
the promotion of any goods or services, or of the supplier of any goods or
services, within the Republic, unless-
(i)
those goods or services could not reasonably be the subject of a transaction to
which this Act applies in terms of paragraph (a); or
(ii)
the promotion of those goods or services has been exempted in terms of
subsections (3) and (4);
(c)
goods or services that are supplied or performed in terms of a transaction to
which this Act applies, irrespective of whether any of those goods or services
are offered or supplied in conjunction with any other goods or services, or
separate from any other goods or services; and
(d)
goods that are supplied in terms of a transaction that is exempt from the
application of this Act, but only to the extent provided for in subsection (5).
(2) This Act does not apply to any
transaction-
(a)
in terms of which goods or services are promoted or supplied to the State;
(b)
in terms of which the consumer is a juristic person whose asset value or annual
turnover, at the time of the transaction, equals or exceeds the threshold value
determined by the Minister in terms of section 6;
(c)
if the transaction falls within an exemption granted by the Minister in terms
of subsections (3) and (4);
(d)
that constitutes a credit agreement under the National Credit Act, but the
goods or services that are the subject of the credit agreement are not excluded
from the ambit of this Act;
(e) pertaining to
services to be supplied under an employment contract;
(f)
giving effect to a collective bargaining agreement within the meaning of
section 23 of the Constitution and the Labour Relations Act, 1995 (Act 66 of
1995); or
(g)
giving effect to a collective agreement as defined in section 213 of the Labour
Relations Act, 1995 (Act 66 of 1995).
·
The
meaning of “transaction” is determined by certain other key concepts defined in
the Act: “consumer”, “goods”, “services”, and “supply”
'consumer', in respect
of any particular goods or services, means-
(a)
a person to whom those particular goods or services are marketed in the
ordinary course of the supplier's business;
(b)
a person who has entered into a transaction with a supplier in the ordinary
course of the supplier's business, unless the transaction is exempt from the
application of this Act by section 5 (2) or in terms of section 5 (3);
(c)
if the context so requires or permits, a user of those particular goods or a
recipient or beneficiary of those particular services, irrespective of whether
that user, recipient or beneficiary was a party to a transaction concerning the
supply of those particular goods or services; and
(d)
a franchisee in terms of a franchise agreement, to the extent applicable in
terms of section 5 (6) (b) to (e);
'goods' includes-
(a) anything
marketed for human consumption;
(b)
any tangible object not otherwise contemplated in paragraph (a), including any
medium on which anything is or may be written or encoded;
(c)
any literature, music, photograph, motion picture, game, information, data,
software, code or other intangible product written or encoded on any medium, or
a licence to use any such intangible product;
(d)
a legal interest in land or any other immovable property, other than an
interest that falls within the definition of 'service' in this section; and
(e) gas, water and
electricity;
'service' includes,
but is not limited to-
(a)
any work or undertaking performed by one person for the direct or indirect
benefit of another;
(b)
the provision of any education, information, advice or consultation, except
advice that is subject to regulation in terms of the Financial Advisory and
Intermediary Services Act, 2002 (Act 37 of 2002);
(c)
any banking services, or related or similar financial services, or the
undertaking, underwriting or assumption of any risk by one person on behalf of
another, except to the extent that any such service-
(i)
constitutes advice or intermediary services that is subject to regulation in
terms of the Financial Advisory and Intermediary Services Act, 2002 (Act 37 of
2002); or
(ii)
is regulated in terms of the Long-term Insurance Act, 1998 (Act 52 of 1998), or
the Short-term Insurance Act, 1998 (Act 53 of 1998);
(d) the
transportation of an individual or any goods;
(e) the provision
of-
(i) any
accommodation or sustenance;
(ii)
any entertainment or similar intangible product or access to any such
entertainment or intangible product;
(iii) access to any
electronic communication infrastructure;
(iv)
access, or of a right of access, to an event or to any premises, activity or
facility; or
(v)
access to or use of any premises or other property in terms of a rental;
(f)
a right of occupancy of, or power or privilege over or in connection with, any
land or other immovable property, other than in terms of a rental; and
(g)
rights of a franchisee in terms of a franchise agreement, to the extent
applicable in terms of section 5 (6) (b) to (e),
irrespective of whether the person
promoting, offering or providing the services participates in, supervises or
engages directly or indirectly in the service;
'supply', when used as
a verb-
(a)
in relation to goods, includes sell, rent, exchange and hire in the ordinary
course of business for consideration; or
(b) in
relation to services, means to sell the services, or to perform or
cause them
to be performed or provided, or to grant access to any
premises, event,
activity or facility in the ordinary course of
business for consideration.