The Consumer Protection Act “CPA” is legislation that took effect in South Africa on 1 April 2011 in order to govern the relationship between a consumer and a supplier. The purpose of the legislation is to protect the consumer. In terms of the CPA, the consumer is given rights where the supplier has duties towards the consumer.
Who is a consumer?
A consumer is an individual person to whom goods or services are promoted or supplied (the consumer also includes a company, close corporation or partnership who has an asset value or annual turnover of less than R2million).
Who is a Supplier?
A supplier is any person, company, close corporation or partnership who promotes or supplies goods or services to a consumer.
Under each transaction there must be at least one consumer and one supplier.
When does the CPA apply?
The CPA applies when a supplier promotes (advertises) or supplies (for example sells or rents) goods or services in the ordinary course of business to a consumer where consideration (for example money) is given by the consumer to the supplier.
For example: John buys a second hand motor vehicle from a car dealership for R10 000. John is the consumer and the car dealership is the supplier. Both parties are bound to the CPA as:
John is the consumer (he is an individual who receives the motor vehicle).
The car dealership is the supplier (the dealership sells John the motor vehicle).
The transaction is undertaken in the ordinary course of business (the car dealership, everyday, sells motor vehicles to consumers as its business).
Consideration is given for the transaction (John pays R10 000 for the motor vehicle to the car dealership).
When will the CPA not apply?
The CPA does not apply to an employer-employee relationship.
The other important exclusion is when a company, close corporation or partnership is a consumer AND whose asset value or annual turnover exceeds R2million at the time of the transaction.
What are the rights of the consumer?
The consumer must be given a quote or breakdown of his/her financial obligations before entering into an agreement.
The agreement a consumer enters into with a supplier must be in plain language that the consumer understands.
No agreement must be longer than 24 months unless the consumer agrees to a longer period (in this instance, the supplier must prove that by extending the period, there is a financial benefit to the consumer).
A consumer must be allowed to cancel the agreement within 20 business days notice.
If goods bought or rented are not suitable for their purpose, as communicated by the consumer to the supplier, the goods may be returned to the supplier.
A booking or order of goods or services may be cancelled by a consumer.
If services rendered are of poor quality, the consumer may request a refund of a portion of the purchase price from the supplier.
If goods are defective, a consumer has 6 months from the date of delivery to return the goods to the supplier, at the supplier’s risk and expense. At the consumer’s choice, the supplier must fix the goods, replace the goods, or repay the consumer for the price paid for the goods (the voetstoots clause no longer applies).
What can a consumer do if a supplier fails to comply with the CPA?
Where the supplier fails to comply with the CPA, the transaction is invalid (which means it is of no force or effect) and the governing body, the National Consumer Commission, may impose a penalty on the supplier for non-compliance to the CPA when the consumer issues a complaint against the supplier.
Note: the provisions above discuss a consumer agreement. A franchise agreement has different provisions in terms of the CPA.
Key:
ORDINARY COURSE OF BUSINESS: refers to business activities that are on-going.
VOETSTOOTS CLAUSE: means goods sold as they are with defects.
