Acts

Author : Andre van Greunen – VgV Attorneys, Notaries & ConveyancersFOR EXCELLENCE IN LEGAL SERVICES

NOTES ON CONSUMER PROTECTION ACT 68 OF 2008

1.PURPOSE OF THE POLICY OF ACT

Forms the legal framework for a consumer market that is fair and responsible for the benefit of the consumer
Reducing disadvantages experienced by low-income consumers. Most of the consumers in our country are ill informed as to their rights and frequently subjected to abuse or exploitation in the market place.
Fair business practices
Protecting consumers from unconscionable and deceptive conduct
Improving consumer awareness and information
Promoting consumer confidence, advocacy and activism
Consumer resolution of disputes arising from consumer transactions
System of redress for consumers

2.APPLICATION OF THE ACT
the Act applies (subject to exemptions) to:

the promotion of goods or services or of the supplier in South Africa;
every transaction in South Africa concerning the supply of goods or services; and
the goods and services themselves
irrespective of whether they’re offered in conjunction with other goods or services separately

3.CONSUMER

person to whom goods or services are promoted or supplied in the ordinary course of the supplier’s business. The description of the term “promote” is very wide and includes to: advertise, display or offer to supply any goods or services in the ordinary course of business, to all or part of the public for consideration. The key word is “ordinary course of business”.
person who has entered into transaction with supplier in the ordinary course of the supplier’s business, unless consumer is over threshold / transaction is exempt
user of goods or recipient or beneficiary of services (even when the user, recipient of beneficiary wasn’t a party to the transaction)
franchise in terms of franchise agreement

4.SUPPLIER

Means a person who markets any goods or services.
Market, when used as a verb, means to promote or supply any goods or services.

5.GOODS

anything marketed for human consumption
any other tangible object, including any medium on which anything is written or encoded
any literature, music, photograph, motion picture, game, information, data, software, code or intangible product written or encoded on any medium, or licence to use such intangible product
legal interest in land or other immovable property, except an interest within the definition of “service”
gas, water and electricity

6. SERVICES

any work or undertaking performed by one person for the direct or indirect benefit of another
provision of education, information, advice or consultation, except advice regulated by Financial Advisory and Intermediary Services (FAIS) Act
banking services, related or similar financial services, or undertaking, underwriting or assumption of risk by a person on behalf of another, except:
advice and intermediary services regulated by FAIS Act or
service regulated by Long-term / Short-term Insurance Acts
transportation of individual or goods
entertainment
access to electronic communication infrastructure
access to event, premises, activity, facility
rental of premises (including vessel / aircraft)
right of occupancy of, or similar right over immovable property, other than rental right
rights of franchisee under franchise agreement; etc.

7.SUPPLY
“supply”when used as a verb –

in relation to goods, includes sell, rent, exchange and hire, in the ordinary course of business for consideration
in relation to services, means to sell the services, or to perform or cause them to be performed, or to perform or cause them to be performed, or to grant access to any premises event , activity or facility in the ordinary course of business for consideration

8.TRANSACTION

agreement between consumer & supplier for the supply (or potential supply) of goods or services, in the ordinary course of supplier’s business, for consideration;
actual supply of goods or services to or at the direction of consumer, for consideration; or
supply of goods or services by a club, trade union, society etc. to its members, and
franchise-related agreements

9.EXEMPTIONS FROM THE ACT
the Act does not apply to transactions when:

consumer is the State
consumer = juristic person with annual turnover or asset value over R3million
credit agreement (the goods or services are still subject to the Act)
services supplied by an employee

10.SPECIFIC INCLUSIONS

Franchise activities (even when over threshold):
Soliciting offers to enter into a franchise
An offer to a franchise to enter into a franchise agreement
Franchise agreement / supplementary agreement
Supply under a franchise agreement
Irrelevant where supplier is based
Irrelevant whether supplier for profit / not
Is an individual / juristic person / state

11.CONSIDERATION
Consideration includes anything of value given and accepted in exchange for goods or services, including:

money, property, cheque/negotiable instrument
token, ticket, debit, loyalty credit, coupon/right to assert a claim
an electronic chip or similar object
labour, barter, other goods/services
undertaking, promise, agreement, assurance
or any other thing irrespective of its value,
whether or not transferred directly or indirectly
or involves only the supplier and consumer or other parties too

12.ORDINARY COURSE OF BUSINESS
Business is defined as:

the continual marketing of any goods or services
To market is defined as:
to promote or supply any goods or services

13.RETURNS AND REFUNDS

Up to 6 months to return faulty or unsafe goods
You have a choice between the supplier repairing or replacing these, or refunding you in full
If the product fails again within the next 3 months, the supplier is once again obliged to replace it or refund you
Remember, this only applies to the general wear and tear of your appliances, not gross negligence on your part
The supplier may charge you a small amount to repackage the product

14.DELIVERIES

If you order online, goods will have to be delivered at an agreed date, time and place. If not, you will be free to accept or cancel the agreement – it is your choice;
companies are obliged to deliver goods that match the sample or description of the product. You have the right to examine your purchases before accepting them and reject them if you are not happy;
if you did not get a change to examine the product and are unhappy with it, you may return it at the supplier’s expense

15.SMS COMPETITIONS

Companies are not allowed to charge more than usual network rates to enter an SMS or MMS competition

16.REPAIRS

an estimate for repairs has to be provided;
consumer must approve the estimate;
charges may not be more than the estimate;
additional work over and above the estimate must be approved by the consumer;
no charges may be levied for preparing the estimate, unless consumer agrees

17.RESERVATIONS

supplier is entitled to charge a reasonable cancellation fee when consumer cancels a booking or reservation;
reasonableness depends on time of cancellation and if supplier can fill empty spot;
no cancellation fee can be charged if person who made the booking dies or is hospitalized

18.RESIDENTIAL LEASE AGREEMENTS
Act is applicable to lease agreements but only if:

i) Landlord rents property in the ordinary course of his business to consumer, (Lessee), that is
a natural person or legal person, (CC or Company) with an annual turn over of less than
R3 million. Persons who own another property besides the one they resides in and lease the
property to other persons will probably not be viewed as leasing it in his ordinary course of his
business. The Act will then not apply.

ii) Then again, a person who owns several houses and derives his income from the rental of the
houses might be viewed as renting the houses in the ordinary course of his business and the
Act will apply if the Lessee meets the criteria above. It will be a matter of interpretation of each
particular set of facts to ascertain whether the Act will be applicable or not.

If the Act applies, the tenant may at any time cancel agreement with 20 business days written notice to landlord.
This applies to all fixed term agreements of which a lease agreement may be one. In my opinion this will not apply to a lease agreement that is on a month to month basis.
Not applicable to transactions between juristic persons regardless of their annual turn over. If the Act applies and the lessee is a natural person, this option will be available to the lessee.
reasonable penalty fee for early cancellation;
landlord must notify tenant not more than 80 days and not less than 40 days before expiration of agreement of its looming expiry;
landlord must also specify in sufficient detail any changes to be made to the existing agreement on renewal;
if tenant does not cancel or renew agreement for another fixed term, the agreement automatically continue on a month to month basis.
Lease agreements must henceforth be codified in plain language
Unfair, unjust and unreasonable contract terms are prohibited.
Landlords prohibited from making false, misleading or deceptive representations to tenants.

19.PROPERTY (COOLING OFF PERIOD)
Cooling off period in terms of Alienation of Land Act still applies.

Purchaser that purchases property as a result of direct marketing has right to cancel the sale within five business days.
Purchaser must be informed by the supplier of this right.
Only applicable to sales resulting from direct marketing, not from show houses and print marketing or where an agent is already working with a client that purchase.
Direct marketing means to approach a person, either in person or by mail or by electronic communication, for the direct or indirect purpose or promoting or supplying goods or services.
Electronic communication means communication by means of electronic transmission, including telephone, fax, sms, wireless computer access, email or any similar technology or device.
start of 5 day period is the date of delivery of the goods to the purchaser.
Delivery in property transaction is not the date of signature but of transfer which can be 3 to 6 months after signature.
Consumer can buy in development and on transfer cancel transaction within 5 days thereafter.
Developer, (supplier), must pay back money within 15 days after cancellation.

20.PROPERTY (VOETSTOOTS CLAUSE)

clause normally inserted for the protection of the seller or supplier;
clause designed to protect a seller from liability for damages arising from hidden, unknown defects;
does not apply if the seller is aware of existence of hidden defect and in bad faith conceals the defect from the purchaser;

the CPA introduces an implied warranty by the supplier that the improvements on the property:

are reasonably suitable for the purpose for which they are usually intended;
are of good quality;
are in good working order;
are free of defects;
will be usable and durable for a reasonable period, in normal use

it does not matter whether purchaser could see the defect or not or whether defect was fraudulently concealed;
seller deemed to have given an implied warranty of quality;
clause can no longer be inserted in agreements for property sold in the ordinary course of business unless it contains a list of defects highlighted to the purchaser and the purchaser expressly accepted the property in that condition

21.PROPERTY (MANDATES AND CONTRACTS)

agents must ensure that sellers and buyers fully understand the meaning and legal effect of the wording used;
no unfair, unjust or unreasonable terms;
price and terms must be fair (market related);
breach clause must be fair and reasonable and not so adverse to the purchaser as to be inequitable

22.GENERAL STANDARDS OF MARKETING
No false/misleading/fraudulent/deceptive representations on any material aspects of the goods/services which relate to:

its nature, properties, advantages and uses;
the manner of conditions under which the goods/services are supplied;
the price or the price in relation to previous prices or competitors’ prices;
the sponsoring of any event;
or any other material aspect of the goods/services
When marketing goods/services, the supplier may not (by words/conduct):
express/imply a misleading representation concerning a material fact;
use exaggeration/innuendo/ambiguity as to a material fact if that failure amounts to deception; or
permit another person to do so on behalf of the supplier
Examples of deceptive representations listed in s41(3)
If breach this clause, court may order agm, void or make other just order [but error in Act at 41(5)]

23.GENERAL STANDARDS OF CONDUCT
In any dealings with a consumer in the ordinary course of business, a person must not –

engage in any conduct contrary to/calculated to/frustrate/defeat purposes & policy of the Act;
engage in any conduct that is unconscionable, misleading or deceptive, or is reasonably likely to mislead or deceive; or
make any representation about a supplier or any goods/services, or related matter, unless the person has reasonable grounds for believing that the representation is true

24.ENFORCEMENT OF CONSUMER LAW

National Consumer Tribunal;
an Ombud;
alternative dispute resolution;
Provincial Consumer Affairs Court;
National Consumer Commission;
Equality Court; and
normal Courts

PREPARED BY:

Andre van Greunen – VGV Attorneys Bellville, Notaries & Conveyancers
Andre can be contacted: andre@vgv.co.za