Eva Smith (Attorney) @ Lucid Living
Two months since the Consumer Protection Act (CPA) “went live” and, predictably, the new law is being misinterpreted by businesses and consumers.
Apparently some businesses don’t regard the Act as being applicable to them and are continuing with their same old consumer-unfriendly practices and policies.
Some appear to be hedging their bets – a major home furnishings store I visited last week had their old “no returns after seven days” notice under the glass of their payment counter, as well as a countertop sign displaying CPA-compliant returns policies.
And many consumers are apparently making unjustified demands of companies, claiming “the CPA says you have to give me …” when the Act says no such thing.
Based on the experiences from some of our clients, we attempt to clarify certain aspects of the CPA for you.
When is the CPA applicable?
The CPA applies to all transactions occurring in SA and to the promotion of goods or services or the promotion of the supply of goods or services in SA.
The CPA came into “full” force and effect on 1 April 2011. Therefore, in general, it only applies to transactions (contracts, agreements etc.) that were entered into or concluded after 1 April 2011.
If you have entered into or concluded a transaction before 1 April 2011 – (except where the CPA applies retrospectively), that transaction does not qualify for any of the rights and protections afforded to you under the CPA.
Despite its limited pre-April 1 applicability, there are some specific retrospective provisions in the CPA, and these relate to aspects of pre-existing fixed-term agreements that expire after March 31 2013, and pre-existing loyalty programmes.
The liability provision (section 61) applies to damage caused by goods that were first supplied to the consumer from April 24 2010 and thereafter. This means that a producer, importer, distributor or retailer is liable for harm caused as a consequence of supplying any unsafe goods; from a product failure, defect or hazard in any goods; or inadequate instructions or warnings on products.
The consequences/harm that a party may be liable for include death, injury, illness, physical damage to property, and economic loss resulting from the harm. Also, it is not a requirement that the harm results from any negligence on the part of any of the parties in the supply chain. Furthermore, liability can be joint and several with other parties in the supply chain.
Most organisations operating in the supply chain as a producer, importer, distributor or retailer of goods, or as a service provider or marketer, will fall under the auspices of the CPA – as will foreign suppliers, non-profit organisations, organs of State in their capacity as suppliers of goods and services, clubs, trade unions and franchisors/franchisees.
Does the CPA apply to any contracts concluded prior to 1 April 2011?
Yes, the CPA has limited retrospective application.
Is any business exempt from the CPA?
The CPA also has some exclusions that exempt certain organisations and certain transactions.
The CPA does not apply when goods and services are supplied to the state (although it does apply when organs of state are the supplier of goods and services). It also does not apply to services regulated by the Financial Advisory and Intermediary Services Act; the Long and Short-term Insurance Acts, as long as these are appropriately amended to align themselves with the CPA; and credit agreements under the National Credit Act.
However, the goods or services that are the subject of credit agreements will be governed by the CPA.
Also outside the ambit of the CPA are services supplied under an employment contract, transactions giving rise to collective bargaining or collective agreements, and export transactions (as the CPA applies only to transactions occurring within SA).
In addition, the CPA does not apply to any transaction where the consumer is a juristic entity with an annual turnover or asset value equal to or greater than two million rand – so small juristic entities below such threshold will enjoy the protection that the CPA offers to natural persons.