The Consumer Protection Act which will come into force on 1 April 2011 could go down in legal history as one of the most revolutionary pieces of legislation to come onto the statute books in South Africa. In many respects it levels the playing field between the suppliers of goods and services and the consumers of such goods and services.
Part of the imbalance of bargaining power is that many contracts that are entered into between contracting parties do not accurately reflect the mutual understanding or agreement between the parties. If one was able to get inside the heads of parties to a contract to see what they have actually agreed upon and understand to be the terms of the contract, most often it reveal something very different to that which is recorded in the written contract.
This applies to virtually any sort of deal from a house lease or purchase to a motorcar purchase or a cell phone contract. In most cases, the consumer is presented with a take-it-or-leave-it standard form contract” and has very little bargaining power indeed. Just think of the last time you were presented with a contract with reams of dreaded fine print or the last time you made an online purchase and clicked I agree to the terms and conditions without even reading them!
This problem becomes more pronounced in a country like South Africa where the majority of the population are historically disadvantaged, are poorly educated and sign agreements that are not in their first language. In these circumstances, many are unlikely to understand fully the implications of a contract or to pick up any inequitable provisions.
The provisions of the Act will make it possible for the consumer to cancel or get out of an agreement under certain circumstances. For example, if the contract is weighted far too greatly in favour of the supplier or contains terms that are so unfair that they are punitive to the consumer, or if the wording is misleading or false and/or if the contract unfairly limits the suppliers warranty or grants him indemnity powers, the consumer will be able to apply for a cancellation of the deal.
Furthermore, the new Act insists not only that the language of the contract must be simple and easy to understand, but, where the consumer is likely to have difficulty with it, it must be explained point-by-point to him and all the possible future problems and difficulties have to be pointed out.
The aim of the law has always been that contracts should be drawn up in which the meeting of the minds of the parties necessary to create an agreement is accurately recorded in the written record of the agreement. If it can be shown that this was not the case and if misinformation, difficult wording or simply silence left the consumer ignorant as to the terms of the written contract, again there will be grounds, in terms of the Act for the cancellation of the contract and the punishment of supplier and/or distributor.
In addition to the Act focusing on the fair wording of contracts, there are a number of other far-reaching provisions. For example, all products, almost without exception will now carry a six month guarantee whether or not they had any guarantee terms previously and the punitive effects of the effects of the Act could be passed all the way up the supply chain.
Gunstons Attorneys are positioned to advise clients on how they should act in these new trading conditions; especially with a view to ensuring that agreements routinely used in the course of business comply with the provisions of the Act in order to avoid the harsh potential consequences of the Act.
Although the Act is intended to complement the Constitution, it is foreseeable that it will lead to products and services becoming more expensive because manufacturers and suppliers are likely now to start factoring in increased remedial and/or replacement costs. The Act will also lead to insurers finding new markets because certain suppliers are likely to take out insurance against an increase in claims.