The Power’s with the People

The Power’s with the People

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The new Consumer Protection Act (CPA) came into effect on 1 April 2011. Consumers should welcome many aspects of the new legislation and in a three-part series of articles I will explain the new Act, with input from advocate JK Berlowitz.

The Consumer Protection Act has made huge changes to the law of sale and many of its provisions favour the consumer, whereas previously the supplier enjoyed an unfair advantage. As a business owner, taking heed of how the consumer benefits is of vital importance to the decisions you make with regards to your own dealings with customers.

Fairness first

The Act seeks to place consumers on equal bargaining terms with suppliers.

A major shift in favour of consumers is in terms of contracts. Previously, if a person signed a contract he was bound by his signature on the contract, unless he could show that the agreement was made contrary to public policy, which happened in very rare instances.

Today, the act allows the consumer, even if he has signed a contract, to raise the point that there are clauses in the contract, which are unfair and unreasonable to him based on the fact that he does not have the same bargaining power as the supplier.

Related: What You Need To Know About the POPI Act

A case in point

As an example, Afrox Healthcare Limited was taken to court by a patient, who was admitted to hospital and subsequently suffered permanent disability as a result of the alleged negligence of a nurse.

 

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In court, Afrox Healthcare Limited relied on a clause in the admission form, which the patient signed, that they were absolved from liability or any loss or damage of any nature whatever the cause. According to evidence, the patient did not read the admission form nor had it been explained to him and the court found in favour of Afrox Healthcare Limited.

Today, the Consumer Protection Act makes such a clause unenforceable, even if the patient signed the admission form, and Afrox Healthcare Limited would have to pay.

The Act covers several examples of clauses which in the past would have favoured the supplier but today work in favour of the consumer.

Changing sales tactics

The well-known ‘voetstoots’ clause, in terms of which previously a car dealer could sell a second-hand motor vehicle as it stands, will now require the dealer to point out what defects are in the car and advise the consumer whether the car has been reconditioned.

The laws relating to loyalty programmes and direct marketing have been tightened substantially.

The laws relating to latent defects and repairs to, for example, motor vehicles and towing malpractices are examples of how the consumer will benefit from the Act.

However, the negative aspects make it clear that at present there are far more questions than answers around the new Act.

The Act also does not make it clear as to the regulatory body at which the consumer must lodge an initial complaint.

The Act gives the consumer the right to go to the Consumer Court or an ombudsman in the case of a particular industry.

A complaint can also be ventilated by dispute resolution but how to advise the consumer which regulatory body to go to in order to serve his best interests, remains to be seen.

At present there are many aspects of the Act which have not been clarified by the regulations relating to the understanding of these clauses.

Related: The Consumer Protection Act and Your Business

Unfair contracts

The Act lays down guidelines for dealing with unfair, unreasonable and unjust contract terms and gives guidelines as to the interpretation of these unfair contracts.

For example, a contract would be unfair if:

  1. It is excessively one-sided in favour of any person other than the consumer or other person to whom goods or services are to be supplied; or
  2. The terms of the transaction or agreement are so adverse to the consumer as to be inequitable.

This would lead to more backlogs at court attempting to define which contracts are unfair, unreasonable and unjust. Certainly, only the courts will be able to interpret these contracts because the Consumer Tribunal and Commissioner will never have the expertise to perform this role.

Another issue is that the Act seeks to introduce the concept of simple, understandable language in contracts and  notices such as exclusions of liability in parking lots and public swimming pools, which where possible must incorporate user-friendly visual representations.

This is laudable, but the Act read with the regulations does not define how and in what language these notices or documents are to be drawn. Although no particular language is prescribed, English appears to be first preference.

Written agreements must comply with a section in the Act which prescribes that such agreements should be written in ordinary plain language to be understood by the consumer.

The Act and the regulations, however, remain unclear as to whether, for instance, an illiterate consumer would have to have the terms and their binding affect upon him explained

Finally, certain sections of the Act require the keeping of cumbersome records and other statutory regulations which will once again generate additional charges.

Once again, this raises the question of who will pay.

Ivan Zartz
Ivan Zartz has been in practice for 40 years and has extensive experience in lecturing law in various management schools in Johannesburg. He wrote the Damlin Management School lecture notes on Commercial Law and Credit. Contact +27 11 483 2741 for more information.