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THE CONSUMER PROTECTION ACT

The Consumer Protection Act 68 of 2008 (CPA or the Act) came into final effect on 31 March 2010 and the regulations under the Act came into effect simultaneously.

The CPA has far-reaching impacts on most transactions concluded in South Africa. The CPA has the effect of limiting the traditionally sacrosanct ‘freedom of contract’ principle in our law. In the past, our courts have held parties free to contract with one another and, irrespective of equality of bargaining power, have held parties bound to agreements into which they have entered. The CPA seeks to bring about a leveling of the playing fields, and in effect strengthens the bargaining power of consumers. Consequently, South African consumers number amongst the most protected consumers in the world.

 

APPLICATION OF THE ACT

The Act covers both goods and services delivered or rendered in the ordinary course of business when this is done for consideration. In most instances your company will be a supplier of goods or services, but it is also a consumer of goods and services, and as such is protected under the CPA.

Goods and services are so broadly defined as to take on a whole new meaning under the CPA.

  • Goods are defined as anything that is supplied or promoted for human consumption (i.e. human use), any tangible or intangible product, information, certain legal interests in immovable property, as well as gas, water and electricity.
  • Services are defined to include any work or undertaking performed by one person for the benefit of another whether direct or indirect, including provision of entertainment or any similar intangible product, transport, accommodation or sustenance, access to an event or any premises, activity or facility, or access to or use of any premises or property, etc.

 

The Act applies to:

  • Transactions occurring in South Africa between suppliers and consumers with regard to goods/services unless specifically exempted (see below);
  • The promotion of goods and services;
  • The goods (for their entire lifetime) and services themselves;
  • Goods which form the subject of an exempted transaction (therefore, even where the transaction is exempted, the goods sold under the transaction are still regulated by the CPA).

 

The Act does not apply when:

  • Goods or services are promoted or supplied to the State;
  • The consumer is a juristic person (including a partnership, body corporate, trust and association) whose asset value or annual turnover equals or exceeds R2 million (except that such a juristic person still has a strict liability claim where goods supplied to them cause harm);
  • The transaction amounts to a credit agreement under the National Credit Act;
  • Services are supplied under an employment contract; or
  • Effect is given to a collective bargaining agreement or collective agreement in terms of South African labour laws.
  • The Securities Services industry and pension funds industry are exempted from certain provisions of the CPA.
  • National Treasury divides municipalities into three categories: low, medium and high capacity. Low and medium capacity municipalities are exempted from complying with the CPA where they act as suppliers of goods or services.
  • Financial advisory and intermediary services regulated under the Financial Advisory and Intermediate Services Act are not regarded as services under the CPA (but if information is supplied, that is regarded as a good for purposes of the CPA).
  • Insurance regulated by the Long-term Insurance Act and the Short-term Insurance Act may also be excluded from the provisions of the CPA that apply to services. This will only be the case if the aforementioned insurance acts are amended by September 2012 to bring them in line with the consumer protection measures in the CPA.

 

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