Consumer Protection Act – how it protects you

The new Consumer Protection Act is a “nightmare of an act”, according to Andrew Robinson, director and maritime law specialist of Durban lawyers, Deneys Reitz. Not in its concept or content, he added, but in what it demands of commerce and industry if they are to comply. “Everyone with standard trading conditions (STCs) – and that’s everybody who sells goods or services – will have to go back to their STCs and check for two things,” Robinson told FTW. “Does it apply to them, and, if so, do their sales conditions comply with the requirements of the act?” Everybody has to do it, but will they? “I doubt it,” said Robinson. “I think a lot won’t bother – and they could get badly nailed if their STCs don’t comply. That’s where the potential nightmare lies.” However, you will have a period of grace in which to get your trading condition ducks in a row. In his period as president, Kgalema Motlanthe signed the bill into law, and the department of trade and industry said that “the National Consumer Commission will commence implementation of the act after the period of 18 months from the date of signing of the bill”. It should be noted that the act is aimed at consumer transactions and not business transactions, according to fellow Deneys Reitz director, Andrew Parsons. “As its name suggests,” he said, “the aim of the act is to protect consumers. It seeks to do this by establishing norms and standards for consumer protection and information, prohibiting unfair marketing and business practices and legislating against unfair contractual terms.” Although the ambit of the act is extremely wide and all encompassing, it will be limited by the relevant minister determining a threshold for the value of transactions over which the act will not apply. “The minister can also grant industry-wide exemptions if there is an overlap with other similar provisions in other legislation.” He, however, also agreed with the “everybody must comply” concept. “In general terms,” Parsons said, “its provisions will apply to the supply of ‘goods’ and ‘services’ to ‘consumers’, as those terms are generally understood. “But it will also regulate a host of other matters, including franchise agreements and loyalty programmes. “The terms ‘goods’ and ‘services’ are extensively defined and will include literally any product or service imaginable – amongst them foodstuffs, music, computer games, interests in immovable property, educational services, banking services and the provision of accommodation and transportation.” An area of the act which is ave far reaching effect is that which prohibits unfair, unreasonable or unjust contractual terms. “Certain pointers are provided as to what will comprise ‘unfair, unreasonable or unjust’ terms,” Parsons added, “namely: • excessively one-sided contracts; • a contract being so adverse to the consumer as to be inequitable; • an indemnity, exclusion of liability or limitation of liability clause which is unfair, unreasonable, unjust or unconscionable, where such term was not recorded in plain language or the nature and effect of such clause was not drawn to the attention of the consumer before the agreement was entered into or before the consumer made any payment.” The last of these pointers does not mean that the act outlaws exclusions or limitations of liability, or indemnities. “But,” said Parsons, “a supplier will no longer be able to limit or exempt liability attributable to the gross negligence of the supplier. And, in particular, such clauses must be in plain language, and the facts, nature and effect of such a clause must be drawn to the attention of the consumer.” He also added that the consequences of a court finding that a contract is unfair, unjust or unreasonable is that it is given the power to make literally whatever order it considers ‘just and reasonable’ in the circumstances, including the award of compensation to the consumer.