ESSENTIAL ASPECTS FOR BUSINESS OF THE CONSUMER PROTECTION ACT
1. WHO IS AFFECTED BY THE CONSUMER PROTECTION ACT (“CPA”)?
Suppliers of products
Suppliers of services
Dual suppliers of services and products
WHEN IS THE CPA APPLICABLE?
It is applicable to every transaction (as dened in the Act) occurring in RSA also, to the promotion of any goods or services within RSA
The Transaction must be in the ordinary course of the business of the Supplier
4. DISADVANTAGES OF THE CPA
Commercial uncertainty: e.g. the fact that consumers can terminate long- term contracts will make projections and budgeting difcult for certain industries.
Contractual uncertainty: e.g. suppliers will not always be sure whether they have contractual certainty since the court or tribunal may now strike out any contract term which they deem to be unfair on the consumer.
Uncertainty surrounding the practical application of certain provisions of the Act.
Open to abuse by consumers: consumers may lay frivolous complaints; or a consumer who owes a supplier money may allege that the supplier is in contravention of the Act, simply to delay or avoid paying.
The Supplier must be Transacting with a Consumer (Consumers are: small business and individuals)
3. WHAT DOES PRODUCT LIABILITY MEAN UNDER THE CPA?
Section 61: Liability for damage caused by goods
The supply chain is jointly and severally liable for any harm, death, injury, illness, loss, physical damage, economic loss caused wholly or partly by :
Supplying unsafe goods
Product failure, defects, hazard in goods
Inadequate instructions, warnings about the product
The supplier is liable regardless of whether there was any negligence present on behalf of the supplier. This is the major change which the Act has brought in, strict liability.
ADVANTAGES OF THE CPA
Creates awareness and a culture of consumer rights protection
Contractual inequality is redressed; David can take on Goliath
Easy (cheap) access to justice
Note: a consumer may lay a complaint with the Commission who will investigate the complaint. In the event of a legitimate complaint, the matter will be referred to the Tribunal for prosecution.
In the event that a supplier (business) is found guilty of being in violation of a provision of the Act, the Tribunal may level an administrative ne of R1000 000 or 10% of annual turn-over, whichever is the greater. This can have a crippling effect on most businesses.