Consumer Protection Act

Consumer’s right to privacy


11. Right to restrict unwanted direct marketing

The provisions in the Act which regulate direct marketing extend to all communication for the purposes of direct marketing (not only direct marketing via electronic communication). In terms of section 11, a consumer may either refuse to accept, pre-emptively block, or require another person to discontinue any communication which may be seen as direct marketing. This may include telephone calls, e-mails, brochures or letters in the mail, etc. The National Consumer Commission will facilitate the establishment of a registry where a consumer may register their particular preferences (for example, that a consumer wishes not to receive any direct marketing (a pre-emptive block) or, where he previously agreed to receive marketing material, he now wishes to change his mind and requires the marketer to stop marketing to him directly). Businesses will have to ensure that they have measures in place to receive and record consumers' specific preferences (at no cost to the consumer), and abide by these expressed preferences.

 

12. Regulation of time for contacting consumers

In addition, the Minister may prescribe certain times when consumers may not be contacted, for example, on public holidays or after a certain time at night.

                

Part C: Consumer's right to choose

13. Consumer's right to select suppliers

“Tying” or bundling arrangements in the context of the abuse of dominance are prohibited by the Act. A supplier must not require, as a condition of offering to supply or supplying any goods or services, or as a condition of entering into an agreement or transaction, that the consumer must purchase any other particular goods or services from it, or enter into an additional agreement or transaction with the same supplier or a designated third party. The focus of the prohibition is accordingly on the supplier requiring the consumer to conclude further or other transactions with it or a designated third party.

                           

It is a defence if the supplier can show that the convenience to the consumer in having those goods or services bundled outweighs the limitation of the consumer's right to choice; that the bundling of those goods or services results in economic benefit for consumers; or that the supplier offers bundled goods or services separately and at individual prices. In the USA the FTC has provided the following example of a warranty provision that would breach this prohibition: ‘In order to keep your new Sux Brand Vacuum Cleaner warranty in effect, you must use genuine Sux Brand Filter Bags. Failure to have scheduled maintenance performed, at your expense, by the Great American Maintenance Company, voids this warranty.’

                               

The following provision would, however, conform to the prohibition: ‘While necessary maintenance or repairs on your AudioMundo Stereo System can be performed by any company, we recommend that you use only authorised AudioMundo dealers. Improper or incorrectly performed maintenance or repair voids this warranty.’

                   

14. Expiry and renewal of fixed-term agreements

This section does not apply to transactions between juristic persons regardless of their annual turnover or asset value. If a consumer agreement is for a fixed term that term must not exceed the maximum period that may be prescribed in terms of section 14(4) with respect to that category of consumer agreement. Despite any provision of the consumer agreement to the contrary the consumer may, without penalty or charge (but subject to section 14(3)(a)) cancel the agreement upon the expiry of its fixed term. The consumer may also, (but subject to subsections (3)(a) and (b) cancel the agreement at any other time, by giving the supplier 20 business days' notice in writing or other recorded manner and form. The consumer has this right of cancellation, despite any provision of the consumer agreement to the contrary.

                            

In terms of section 14(3)(a), the consumer remains liable to the supplier for any amounts owed to the supplier in terms of that agreement up to the date of cancellation; and the supplier may impose a reasonable cancellation penalty with respect to any goods supplied, services provided, or discounts granted, to the consumer in contemplation of the agreement enduring for its intended fixed term, if any. The supplier must however credit the consumer with any amount that remains the property of the consumer as of the date of cancellation.

                              

Despite any provision to the contrary in the agreement, the supplier may cancel the agreement 20 business days after giving written notice to the consumer of a material failure by the consumer to comply with the agreement, unless the consumer has rectified the failure within that time. The supplier must notify the consumer in writing of the impending expiry of the agreement, not more than 80 and not less than 40 business days, before the expiry date of the fixed term of the consumer agreement. This notification must include a notice of any material changes that would apply if the agreement is to be renewed or may otherwise continue beyond the expiry date; and the options available to the consumer in terms of paragraph (d).

                        

On the expiry of the fixed term consumer agreement, it will automatically be continued on a month-to-month basis, subject to any material changes of which the supplier has given notice, as contemplated in paragraph (c) unless the consumer expressly:

  • directs the supplier to terminate the agreement on the expiry date; or
  • agrees to a renewal of the agreement for a further fixed term.

 

The Minister may, by notice in the Gazette, prescribe-

  • the maximum duration for fixed-term consumer agreements.
  • the manner and form of providing notices to the consumer in terms of subsection (2)(c);
  • the manner, form and basis for determining the reasonableness of credits and charges contemplated in subsection (3); and
  • other incidental matters as required to provide for the proper administration of this section.

 

15. Pre-authorisation of repair or maintenance services

Where a service provider supplies a repair or maintenance service to, or supplies or installs any replacement parts or components in, any property belonging to or in the control of the consumer, and the service provider has, or takes, possession of that property for the purpose contemplated in this paragraph, the service provider is required to furnish the consumer with an estimate of charges and to obtain from the consumer a pre-authorisation to do the work, prior to carrying out any work. In the event that the service provider does not have, or does not take possession of such property, he is equally required to furnish the consumer with an estimate of charges and to obtain from him a pre- authorisation to do the work before any services or goods are supplied.

                           

A service provider, to whom this section applies, may not charge a consumer for the supply of any goods or services contemplated in subsection (1) unless the supplier or service provider has given the consumer an estimate that satisfies the prescribed requirements, and the consumer has subsequently authorised the work. The prohibition in section 15(2) does not apply where the consumer, in writing, or by another recorded manner or form, has declined the offer of an estimate, and authorised the work; or pre-authorised any charges up to a specified maximum, and the amount charged does not exceed that maximum.

                                  

If a supplier has provided an estimate for any service, or goods and services, he may not charge the consumer a price for that service, or those goods and services that exceeds the estimate, unless after providing the estimate he has informed the consumer of the additional estimated charges and the consumer has authorised the work to continue. A service provider to whom this section applies may not charge a consumer for preparing an estimate required in terms of subsection (2)(a), including-

  • any cost of performing any diagnostic work, disassembly or re-assembly required in order to prepare an estimate; or
  • any damage to or loss of material or parts in the course of preparing an estimate,

unless, before preparing the estimate the service provider has disclosed the price for preparing that estimate, and the consumer has approved it. See also section 25 (Reconditioned, re-built or re-made and grey market goods), Section 54 (quality services); Section 57 (implied warranty on repaired goods and voetstoots clauses).

                             

16. Consumer’s right to cooling-off period after direct marketing

This section provides for a 5 business day cooling off period in instances where transactions resulted from direct marketing, in other words, transactions which were not initiated by the consumer. The five business day period will commence on the latter of the day on which the transaction or agreement was concluded, or the day on which the goods or services were delivered to the consumer. This section does not apply to transactions which are governed by section 44 of the Electronic Communications and Transactions Act, 2002 (in terms of which consumers have a seven day cooling off period (normal days, not business days).

                              

A supplier must return any payment received from the consumer in terms of the transaction within 15 business days after receiving notice of the rescission, if no goods had been delivered to the consumer in terms of the transaction; or receiving from the consumer any goods supplied in terms of the transaction; and A supplier may not attempt to collect any payment in terms of a rescinded transaction, except as permitted in terms of section 20(6).

 

17. Consumer’s right to cancel advance reservation, booking or order

 

Unqualified freedom of contract means that a customer is bound to a supplier with whom it had made any advance booking, reservation or order for any goods or services. The CPA curtails this freedom to some extent. This section does not apply to a franchise agreement, or in respect of any special-order goods. A consumer has the right to cancel any advance booking, reservation or order for any goods or services to be supplied. The consumer’s right is not unqualified and is limited by subsections 3) and 4) below.

                           

A supplier who makes a commitment or accepts a reservation to supply goods or services on a later date may require payment of a reasonable deposit in advance; and impose a reasonable charge for cancellation of the order or reservation, subject to subsection (5).

For the purposes of this section, a charge is unreasonable if it exceeds a fair amount in the circumstances, having regards to:

  • the nature of the goods or services that were reserved or booked;
  • the length of notice of cancellation provided by the consumer;
  • the reasonable potential for the service provider, acting diligently, to find an alternative consumer between the time of receiving the cancellation notice and the time of the cancelled reservation: and
  • the general practice of the relevant industry.

 

A supplier may not impose any cancellation fee in respect of a booking, reservation or order if the consumer is unable to honour the booking, reservation or order because of the death or hospitalisation of the person for whom, or for whose benefit the booking, reservation or order was made.

                        

18. Consumer’s right to choose or examine goods

 A consumer has the right to pick and choose from goods that are openly displayed. The consumer cannot be held liable for any loss or damages to those goods on display unless it was caused by the gross negligence, recklessness, malicious behaviour or criminal conduct of the consumer. This is so despite the existence of any notice or statement to the contrary. If any goods are displayed in or sold from open stock, the consumer has the right to select or reject any particular item from that stock before completing the transaction.

               

If the consumer has agreed to purchase goods solely on the basis of a description or sample, or both, provided by the supplier, the goods delivered to the consumer must in all material respects and characteristics correspond to that which an ordinary alert consumer would have been entitled to expect based on the description or on a reasonable examination of the sample, as the case may be. If a supply of goods is by sample, as well as by description, it is not sufficient that any of the goods correspond with the sample if the goods do not also correspond with the description.

                      

19. Consumer’s rights with respect to delivery of goods or supply of service

This section does not apply to the supply of goods or services to a franchisee in terms of a franchise agreement; or a transaction if the performance of that transaction is governed by section 46 of the Electronic Communications and Transactions Act. The parties are free to expressly agree as to whether the goods will be delivered, where it will be delivered and/or with regard to how the services will be performed. If they did not expressly so agree, it is an implied condition of every transaction for the supply of goods or services that the supplier is responsible for delivering the goods or performing the services on the agreed date and at the agreed time, (if any) or otherwise within a reasonable time after concluding the transaction or agreement; at the agreed place of delivery or performance; and at the cost of the supplier, in the case of delivery of goods.

                  

It is also an implied condition of every transaction for the supply of goods or services that, unless otherwise expressly provided for, or anticipated, in an agreement, the agreed place of delivery of goods or performance of services is the supplier's place of business, if the supplier has one, and if not, the supplier's residence. Goods to be delivered remain at the supplier's risk until the consumer has accepted delivery of them.

                      

If an agreement does not provide a specific date or time for delivery of any goods or performance of any services, the supplier must not require that the consumer accept delivery or performance of the services at an unreasonable time. The consumer is regarded to have accepted delivery of any goods on the earliest of the following circumstances:

  • When the consumer expressly (actually)or implicitly(by conduct) communicates to the supplier that the consumer has accepted delivery of such goods: or
  • when the goods have been delivered to the consumer, and the consumer does anything in relation to the goods that would be inconsistent with the supplier's ownership of them (like wearing them); or
  • the consumer keeps the goods for longer than is reasonable without informing the supplier that he doesn’t want it.

 

Sub section 5) states that when a supplier tenders delivery to a consumer of any goods, the supplier must, on request, allow the consumer a reasonable opportunity to examine those goods for the purpose of ascertaining whether the consumer is satisfied that the goods are of a type and quality reasonably contemplated in the agreement, and meet the tests set out in section 18(3) and (4); and in the case of a special-order agreement, reasonably conform to the material specifications of the special order. If the supplier tenders the delivery of goods or the performance of any services at a location, on a date or at a time other than as agreed with the consumer, or if such an supplier wants to change the agreed arrangements for delivery, the consumer has the option of-

  • accepting the change;
  • insisting on the delivery or performance as agreed; or
  • cancelling the agreement without penalty, treating any delivered goods or performed services as unsolicited goods or services in accordance with section 21.

 

If the supplier delivers to the consumer more goods than were ordered, the consumer may either reject all of the delivered goods; or accept delivery of the goods, and pay for the agreed quantity at the agreed rate; and treat the excess quantity as unsolicited goods in accordance with section 21. If the supplier delivers to the consumer some of the goods the supplier agreed to supply mixed with goods of a different description not contemplated in the agreement, the consumer may accept delivery of the goods that are in accordance with the agreement and reject the rest; or reject all of the delivered goods.

                             

20. Consumer’s right to return goods

This section is in addition to and not in substitution for the right to return unsafe or defective goods, contemplated in section 56; or any other right in law between a supplier and consumer to return goods and receive a refund. Subject to subsections (3) to (6), the consumer may return goods to the supplier, and receive a full refund of any consideration paid for those goods, if the supplier has delivered—

  • goods to the consumer in terms of an agreement arising out of direct marketing, and the consumer has rescinded that agreement during the cooling off period, in accordance with section 16;
  • goods that the consumer did not have an opportunity to examine before delivery, and the consumer has rejected delivery of those goods for any of the reasons contemplated in section 19(5);
  • a mixture of goods, and the consumer has refused delivery of any of those goods, as contemplated in section 19(8); or
  • goods intended to satisfy a particular purpose communicated to the supplier as contemplated in section 55(3), and within 10 business days after delivery to the consumer, the goods have been found to be unsuitable for that particular purpose.

 

Subsection (2) does not apply with respect to any goods, if, for reasons of public health or otherwise, a public regulation prohibits the return of those goods to a supplier once they have been supplied to, or at the direction of, a consumer; or after having been supplied to, or at the direction of, the consumer, the goods have been partially or entirely disassembled, physically altered, permanently installed, affixed, attached, joined or added to, blended or combined with, or embedded within, other goods or property(tampered with).

                   

If the consumer cancels a direct marketing agreement as envisaged above in the cooling off period, and it is permissible to return those goods, they are returned to the supplier at the consumer’s risk and expense. In all other instances, the goods are returned at the supplier’s risk and expense. All these goods must be returned within 10 business days after delivery to the consumer. Upon receiving the returned goods, the supplier must refund to the consumer the price paid for the goods, less any amount that may be charged in terms of subsection (6). In terms of subsection 6) the supplier may not charge the consumer any amount in respect of the goods if the goods are in their original unopened packaging.

                            

If the goods are in their original condition and repackaged in their original packaging, the supplier may charge the consumer a reasonable amount for—

  • use of the goods during the time they were in the consumer’s possession, unless they are goods that are ordinarily consumed or depleted by use, and no such consumption or depletion has occurred; or
  • any consumption or depletion of the goods, unless that consumption or depletion is limited to a reasonable amount necessary to determine whether the goods were acceptable to the consumer; or

 

If any goods returned to in terms of this section are not in the original unopened packaging, or not in their original condition and re-packaged in their original packaging, the supplier may charge the consumer a reasonable amount for necessary restoration costs to render the goods fit for re-stocking, unless, having regard to the nature of the goods, and the manner in which they were packaged, it was necessary for the consumer to destroy the packaging in order to determine whether the goods were:

  • the same as the description or sample provided, in the case of goods that had not been examined by the consumer before delivery.
  • fit for the intended purpose. Section 55(3).       

 

21. Unsolicited goods or services

A common example of an unsolicited service is the unasked for washing of your car’s windscreen at an intersection. A consumer can’t be forced to pay for unsolicited goods, the cost of delivery thereof, or for unsolicited services, as long as the consumer complies with the requirements of the Act.

                 

Goods and services may become ‘unsolicited’ in a number of instances, including:

  • Goods left with, or any service performed for a consumer by a supplier, during any direct marketing of goods or services, without requiring or arranging payment for them;
  • Goods or services that are materially different from the goods or services previously supplied to an extent not reasonably contemplated in an agreement

                      

for the periodic delivery of goods, unless the consumer expressly consented to the material change;

  • Goods delivered after the termination of an agreement;
  • Goods delivered or services performed at a location, date or time other than as agreed, and the consumer has rejected that delivery or performance of services, as contemplated in section 19(6), those goods or services are unsolicited
  • If a supplier delivers a larger quantity of goods than the consumer agreed to buy, the excess goods are unsolicited unless the consumer has rejected the entire delivery; or
  • Any goods delivered to, or any services performed for, a consumer by or on behalf of a supplier without the consumer having expressly or implicitly requested that delivery or performance.

 

Goods are not considered to be unsolicited goods if the supplier informs the consumer within 10 business days after delivery of such goods that the goods were delivered in error, (if they are clearly addressed to another person, or where it would be clear to the ordinary alert customer that the goods are misdelivered) those goods become unsolicited only if the supplier fails to recover them within 20 business days after so informing the consumer.

                         

The recipient of goods so misdelivered is not allowed to frustrate or impede any reasonable action by the supplier or deliverer to recover those goods within the allowed 20 days. Any frustration or impeding of this nature might render the consumer liable for any additional costs of recovery, or for damages that resulted.

                       

A person in possession of any unsolicited goods is not responsible for the cost of recovery of those goods, or for redelivering them, or for any loss or damage, unless those damages or loss was caused intentionally. Unsolicited goods can either be returned to the supplier or deliverer. This will be at the risk and expense of the supplier or deliverer. The recipient can also decide to keep these goods and the right of ownership will pass to the recipient, subject to any right or valid claim from an uninvolved third party. The Act puts no duty on a mistaken recipient of misdelivered goods to actually inform such a supplier of the error. To keep such an item with the required knowledge that it does not belong to you, might well render such a receiver liable for theft.

                   

Part D: Right to disclosure and information

22. Right to information in plain and understandable language

This requirement is a transparency requirement. The requirements of the Act relating to transparency and plain language are set out in sections 22, 49(3)-(5) and 50(2). Certain documents must be in a prescribed form or format. If no such form or format is prescribed, the information produced, provided or displayed to a consumer must be in plain language. This applies to any notice, document or visual representation.

                

A document, notice or visual representation is in plain language if it is reasonable to conclude that an ordinary consumer of the class of persons for whom the notice, document or visual representation is intended, with average literacy skills and minimal experience as a consumer of the relevant goods or services, could be expected to understand the content, significance and import of the notice, document or visual representation without undue effort, having regard to—

  • the context, comprehensiveness and consistency of the notice, document or visual representation;
  • the organisation, form and style of the notice, document or visual representation;
  • the vocabulary, usage and sentence structure of the notice, document or visual representation; and
  • the use of any illustrations, examples, headings or other aids to reading and understanding.

 

23. Disclosure of price of goods or services

Suppliers have a legal duty to inform consumers of the price of goods and services as offered by them. A retailer who displays goods for sale must display a price in relation to those goods. The term ‘price’ includes any mark, notice or visual representation that may reasonably be inferred to indicate or express an association between any goods and services and the value of the consideration for which the supplier is willing to sell or supply those goods or services, and a unit price.

                    

‘Display’ with regard to any goods means placing, exhibiting or disclosing those goods before the public in the ordinary course of business in a manner consistent with an open invitation to members of the public to inspect and select those or similar goods for supply to a consumer. ‘Display’ when used in relation to a price means to place or publish anything in a manner that reasonably creates an association between that price and any particular goods or services.

                         

A retailer is not obliged to display a price for any goods if those goods are displayed predominantly as an advertising display, or if the goods and services are in an area within the supplier’s premises to which the public does not ordinarily have access. Section 23 is also not applicable to a transaction where the supplier has provided an estimate pertaining to that transaction, or where the consumer has waived such an estimate, as contemplated in section 15. It is also not applicable if section 43 of the Electronic Communications and Transactions Act applies to that transaction. A supplier offering goods or services for sale, hire or exchange by way of an electronic transaction must make the full price of the goods or services, including transport costs, taxes and other hidden costs, available to consumers on such a website where these goods or services are offered.

              

It is permissible to cover an earlier price, as long as it is fully covered. If a price is fully covered or obscured by a second price, the second price is the displayed price. A supplier is bound by any displayed price and may not charge a price higher than the displayed price or the lowest displayed price if more than one price is displayed. A displayed price will take precedence over a bar-coded price.

                   

If a price displayed contains an obvious and inadvertent error, the supplier won’t be bound by it after he had corrected it, and once he took reasonable steps to inform customers and/or parental customers of both the error and the correct price. A supplier will also not be bound by a price if an unauthorised person has altered, defaced, covered, removed or obscured the price displayed. It is an offense to alter, deface, cover, remove or obscure a displayed price without authority.

                                

24. Product labelling and trade descriptions

The act prohibits the application of certain trade descriptions that are likely to mislead the consumer. A trade description refers to any description, statement or other indirect indication (other than a trademark) relating to:

  • the number, quantity, measure, weight or gauge of any goods;
  • the name of the manufacture or producer of any goods;
  • the ingredients of which it consists, or the material of which it is made;
  • the place or country of origin;
  • the mode of manufacturing or producing of the goods; or
  • any goods being the subject of any patent, privilege or copyright.

 

A person must not knowingly apply to any goods a trade description that is likely to mislead the consumer as to any matter implied or expressed in that trade description; or alter, deface, cover, remove or obscure a trade description or trade mark applied to any goods in a manner calculated to mislead consumers. Even a retailer of goods must not offer to supply, display or supply any particular goods if the retailer knows, reasonably could determine, or has reason to suspect that such a trade description applied to those goods is likely to mislead the consumer as to any matter implied or expressed in that trade description.

                    

The Minister may prescribe:

  • categories of goods that are required to have a trade description applied to them, as contemplated in subsection (5);
  • the rules to be used in accordance with any international agreement for the purpose of determining the country of origin of any goods or components of any goods; and
  • the information that is required to be included in any trade description, from among the categories of information contemplated in the definition of ‘‘trade description’’ in section 1.

 

Any person who produces, supplies, imports or packages any prescribed goods must display on, or in association with the packaging of those goods, a notice in the prescribed manner and form that discloses the presence of any genetically modified ingredients or components of those goods in accordance with applicable regulations.

          

25. Disclosure of reconditioned or gray market goods

Suppliers must warn consumers with a conspicuous notice when branded goods had been reconditioned, rebuilt or remade, or that they have been imported without the approval or licence of the registered owner of the trade mark (grey market goods).

                

26. Sales records

The keeping of certain transaction records constitutes essential business practice. The Act also requires the keeping of various transaction and business records, like records to be kept by intermediaries, records of promotional competitions, databases (section 60(1)), transactions for the supply of goods and services (section 26), and the records of telephone transactions (section 50).

              

The supplier of goods and services must provide a written record of each transaction to the consumer to whom any goods or services are supplied. This record must include at least the following information:

  • The supplier’s full name, or registered business name, and VAT registration number, if any;
  • the address of the premises at which, or from which, the goods or services were supplied;
  • the date on which the transaction occurred;
  • a name or description of any goods or services supplied or to be supplied;
  • the unit price of any particular goods or services supplied or to be supplied;
  • the quantity of any particular goods or services supplied or to be supplied;      
  • the total price of the transaction, before any applicable taxes;
  • the amount of any applicable taxes; and
  • the total price of the transaction, including any applicable taxes.

 

Section 26 does not apply to a transaction if section 43 of the Electronic Communications and Transactions Act applies to that transaction; or the transaction has been exempted by the Minister. The Minister may, by notice in the Gazette, exempt categories of goods or services, or circumstances of trade.

                     

27. Disclosure by intermediaries

"Intermediary “means a person who, in the ordinary course of business and for remuneration or gain, engages in the business of—

  • representing another person with respect to the actual or potential supply of any goods or services;
  • accepting possession of any goods or other property from a person for the purpose of offering the property for sale; or
  • offering to sell to a consumer, soliciting offers for or selling to a consumer any goods or property that belongs to a third person, or service to be supplied by a third person,

 

but does not include a person whose activities as an intermediary are regulated in terms of any other national legislation. Certain types of intermediaries, like estate agents, are subject to specific regulation already. The Act now creates a framework in terms of which intermediaries may be required to disclose prescribed information and keep prescribed records. These information and records are not disclosed in the Act yet, but provision is made for the Minister to prescribe such information or records by regulation or notice. An intermediary must disclose prescribed information to:

  • any person whom the intermediary solicits or agrees to represent with respect to the sale of any property or services, or from whom the intermediary accepts any property for the purpose of offering it for sale; and
  • any person from whom the intermediary solicits an offer, or to whom the intermediary offers to supply or supplies any service to be performed by a third person; or any goods or property belonging to a third person;

 

An intermediary must keep the prescribed records of all relationships and transactions contemplated in this section.

Subsection (1) does not apply to an intermediary who is:

  • the executor or other administrator of a deceased’s estate, in respect of any property of that estate;
  • the liquidator of an insolvent estate, in respect of any property of that estate; or
  • a trustee in respect of any trust property.

 

28. Identification of deliverers, installers and others

Whenever a person is engaged in direct marketing in person at the premises of a consumer, or performing any services for a consumer at any such premises, or delivering any goods to, or installing any goods for, a consumer, at any such premises, that person must visibly wear or display a badge or similar identification device that satisfies any prescribed standards; or provide suitable identification on request by the consumer.

                    

Part E: Right to fair and responsible marketing

29. General standards for marketing of goods or services

In broad terms, a supplier may not engage in any conduct that is unconscionable, misleading, deceptive, or that is reasonably likely to mislead or deceive or make any representation about a supplier or any goods or services unless such a supplier has reasonable grounds for believing that such a representation is true. (Section 4(5) Section 29 also deals with the honesty requirement in marketing, and set out general standards that must be adhered to when marketing services or goods.

                       

A producer, importer, distributor, retailer or service provider must not market any goods or services in a manner that is:

  • reasonably likely to imply a false or misleading representation concerning those goods or services, as contemplated in section 41; or
  • misleading, fraudulent or deceptive in any way, including in respect of—
  • the nature, properties, advantages or uses of the goods or services;
  • the manner in or conditions on which those goods or services may be supplied;
  • the price at which the goods may be supplied, or the existence of, or relationship of the price to, any previous price or competitor’s price for comparable or similar goods or services;
  • the sponsoring of any event; or
  • any other material aspect of the goods or services.

 

It is also a false, misleading or deceptive representation to falsely state or imply, or fail to correct an apparent misapprehension on the part of the consumer to the effect that a specific price advantage exists. Section 41 deals with false, misleading or deceptive representations, section 24(2) deals with misleading trade descriptions, section 48(1) deals with unfair, unreasonable or unjust prices or marketing and section 42(2) with the distribution of false communication.

   

30. Bait marketing

A supplier must not advertise any particular goods or services as being available at a specified price in a manner that may result in consumers being misled or deceived in any respect relating to the actual availability of those goods or services from that supplier, at that advertised price.

             

If a supplier advertises particular goods or services as being available at a specified price, and the advertisement expressly states a limitation in respect of the availability of those goods or services from that supplier at that price, the supplier must make those goods or services available at that price, to the extent of the expressed limits.

              

It is a defence to an alleged failure to comply with subsections (1) or (2) if the supplier offered to supply or procure another person to supply a consumer with the same or equivalent goods or services of the kind advertised within a reasonable time, in a reasonable quantity, and at the advertised price; and the consumer unreasonably refused that offer; or accepted the offer, and the supplier has supplied or procured another person to supply the goods or services so offered and accepted.

 

31. Negative option marketing

Negative option marketing amounts to prohibited conduct. Negative option marketing consists of informing the consumer that a sale agreement will come into force, or an agreement will be modified unless the consumer notifies the supplier otherwise that he doesn’t wish to proceed with it. A typical scenario would include the supplier delivering the goods to the consumer, with the consumer liable for the goods unless he returns it. Another example is when the consumer is informed of intended changes to an existing agreement and that these changes will come into effect unless the consumer objects by a certain date. These agreements or modifications are void and the goods so received will be unsolicited.

              

32. Direct marketing to consumers

“Direct marketing” means to approach a person, either in person, or by mail or electronic communication, for the direct or indirect purpose of promoting, or offering to supply, in the ordinary course of business, any goods or services to the person, or for the purpose of requesting the person to make a donation of any kind for any reason.

                     

A person who is directly marketing any goods or services, and who concludes a transaction or agreement with a consumer, must inform the consumer, in the prescribed manner and form, of the right to rescind that agreement, as set out in section 16. The consumer has the right to be informed of the cooling-off period that applies. If a person who has marketed any goods as contemplated in subsection (1) left any goods with the consumer without requiring or arranging payment for them, those goods are unsolicited goods, to which section 21 applies.

                     

33. Catalogue marketing

Catalogue marketing comprises an agreement for the supply of goods or services that is not entered into in person and where the consumer does not have the opportunity to inspect the goods before concluding the agreement. It includes an agreement concluded telephonically, by postal order or fax, or in any similar manner, irrespective whether or not the contact was initiated by the consumer. Such agreements take place, for example, where a consumer orders goods that he or she saw in a catalogue.

              

Before concluding such an agreement or transaction, a supplier must disclose the following information to a consumer, in an appropriate manner, having regard to the manner in which the supplier and consumer communicate in concluding the transaction:

  • the supplier’s name and licence or registration number, if any;
  • the address of the supplier’s physical business premises and related contact details
  • the sales record information required by section 26;
  • the currency in which amounts under the agreement are payable;
  • the supplier’s delivery arrangements, including—
  • the identity of the shipper;
  • the mode of transportation; and
  • the place of delivery to the consumer;
  • the supplier’s cancellation, return, exchange and refund policies, if any;
  • the manner and form in which a complaint may be lodged; and
  • any other prescribed information.

 

34. Trade coupons and similar promotions

 

This section does not apply to— 

  • a franchise agreement;
  • a loyalty programme, loyalty credit or award regulated in terms of section 35; or
  • a promotional competition, as defined and regulated in terms of section 36.

 

In this section, ‘‘promotional offer’’ means an offer or promise, expressed in any manner, of any prize, reward, gift, free goods or service, price reduction or concession, enhancement of quantity or quality of goods or services, irrespective of whether or not acceptance of the offer is conditional on the offeree entering into any other transaction.

            

The document setting out such a promotional offer must clearly state:

  • the nature of the prize, reward, gift, free good or service, price reduction or concession, enhancement of quantity or quality of goods or services, or other discounted or free thing being offered;
  • the goods or services to which the offer relates;
  • the steps required by a consumer to accept the offer or to receive the benefit of the offer; and
  • the particulars of any person from whom, any place where, and any date and time on or at which, the consumer may receive the prize, reward, gift, free good or service, price reduction or concession, enhancement of quantity or quality of goods or services or other discounted or free thing.

 

A person making a promotional offer must be able to fulfill it and meet the reasonably anticipated demands resulting from such an offer. A person making a promotional offer may not require the consumer to accept an inferior quality of any such goods or services than those generally available to any other consumer on the same date who tenders a different form of consideration; and may not impose any monetary charge for the administration, processing or handling of a transaction in respect of which the consumer tenders a trade coupon. It is a defence to an alleged failure to comply with the section if the supplier arranged comparable substitute goods or services.

 

35. Customer loyalty programmes

Loyalty credits or awards are a recognised legal medium of exchange, just like cash, when tendered as consideration for any goods or services in terms of that loyalty programme. The sponsor of a loyalty programme, or a supplier who offers or holds out a willingness, to accept any loyalty credits or awards as consideration or in exchange for any particular goods or services, offering participation in a loyalty programme must be able to supply sufficient quantities of the particular goods or services of the quality as promised to accommodate all reasonably anticipated demand. No monetary charge in respect of the administration, processing or handling of such a transaction if the consumer is required to pay a periodic (recurring) fee to remain a member of the programme, may be levied. The consumer cannot be required to purchase any other goods or services in connection with that transaction.

                      

A sponsor of a loyalty programme, or a supplier of goods or services who accepts loyalty credits or awards as consideration for any particular goods or services, may impose a partial or complete restriction on the availability of any such goods or services in exchange for loyalty credits or awards during any specific period, if the programme sponsor has directly or indirectly given notice in writing to the members of that programme at least 20 business days before the beginning of that period, but the total of all such periods within a calendar year must not exceed 90 days. It is a defence to an alleged failure to comply with subsection if the supplier arranged comparable substitute goods or services of the relevant kind to satisfy the consumer’s request.

              

36. Promotional competitions

From a marketing perspective, promotional competitions are generally designed to create interest in a product or service, and often to encourage brand switching. A ‘‘promotional competition’’ means any competition, game, scheme, arrangement, system, plan or device for distributing prizes by lot or chance if it is conducted in the ordinary course of business for the purpose of promoting a producer, distributor, supplier, or association of any such persons, or the sale of any goods or services. It is immaterial whether a participant is required to demonstrate any skill or ability before being awarded a prize. ‘‘Prize’’ includes a reward, gift, free good or service, price reduction or concession, enhancement of quantity or quality of goods or services, or other discounted or free thing.

           

One may not inform another person that such a person has won a competition or a prize, if:

  • no competition has in fact been conducted;
  • the person has not in fact won the competition;
  • the prize for that competition is subject to a previously undisclosed condition; or
  • the person is required to buy something or pay something for the prize (usually an ‘administrative fee’)

The promoter of a promotional competition may, however, require the payment of the reasonable costs of posting or otherwise transmitting an entry form or device.

               

The following persons are excluded from participation in competitions:

  • a director, member, partner, employee or agent of, or consultant to the promoter or any other person who directly or indirectly controls or is controlled by, the promoter; or
  • a supplier of goods or services in connection with that competition.

 

The promoter of the competition must:

  • prepare competition rules before the beginning of the competition;
  • make the competition rules available to the Commission and to any participant, on request and without cost; and
  • retain a copy of the competition rules for the prescribed period after the end of the competition.

 

An offer to participate in a promotional competition must clearly state the benefit or competition to which the offer relates. It must further provide details of:

  • the steps required by a person to accept the offer or to participate in the competition;
  • the basis on which the results of the competition will be determined;
  • the closing date for the competition;
  • the medium through or by which the results of the competition will be made known; and
  • how the price can be collected.

 

The right to any benefit or right conferred on a person as a result of that person’s participation in a promotional competition is fully vested immediately upon the determination of the results of the competition. The Minister may prescribe:

  • a monetary threshold for the purpose of excluding competitions with low value prizes from the definition of ‘‘promotional competition’’;
  • minimum standards and forms for keeping records associated with promotional competitions; and
  • audit and reporting requirements in respect of promotional competitions.

 

37. Alternative work schemes

A person must not make a false representation with respect to the availability, or extent of availability, actual or potential profitability, risk or other material aspect of the work, business or activity involved in any arrangement of an activity for gain in terms of which one person: 

  • invites, solicits or requires other persons to conduct the work, business or activity from their homes;
  • represents to others as being practicable, to a considerable extent, to conduct the work, business or activity from their homes; or
  • invites, solicits or requires other persons to perform any work, business or activity, invest money, or perform any work, business or activity in association with the investment of money.

            

These work-from-home schemes are still permissible, but their promoters may not charge a fee for getting any work, business, activity or investment unless to the extent that the person charged has been assigned and performed the contemplated work, business, activity, or made or received the contemplated investment.

                

Any advertisement promoting any such scheme must be accompanied by a cautionary statement in the prescribed wording and form, disclosing the uncertainty of the extent of the work, business or income or other benefit to be derived. It must also disclose at least the following information:

  • The full name, or registered business name, of the promoter, and the address and contact numbers of that person’s primary place of conducting the business; and
  • the nature of the work, business, activity or investment.

No false representation may be made regarding the availability of the work, business or other such activity.

         

38. Referral selling

A person must not market any goods or services to a consumer on the representation that the consumer will receive a rebate, commission or other benefit if the consumer subsequently gives the supplier the names of consumers; or otherwise assists the supplier in some way. A statement by a consumer, whether in an agreement or otherwise, to the effect that the consumer was motivated to enter into such a transaction predominately for the value of the goods or services, rather than for the rebate, commission or benefit, is not a defence to an allegation that a person has contravened this section. It seems like this section can be circumvented by offering a direct commission to consumers for any new business generated. The key is to avoid the word ‘if’ and ‘consequently’.

                   

39. Agreements with persons lacking legal capacity

An agreement to enter into a transaction, or for the supply of any goods or services, to or at the direction of a consumer is void if the consumer is subject to an order of a competent court holding that person to be mentally unfit and the supplier knew, or could reasonably have determined, that the consumer was the subject of such an order. 

                

The agreement is voidable at the option of the consumer, if:

  • at the time the agreement was made the consumer was an unemancipated minor;
  • the agreement was made without the consent of an adult responsible for that minor; and

This section does not apply to an agreement if the consumer, or any person acting on behalf of the consumer, directly or indirectly, by act or omission induced the supplier to believe that the consumer had an unfettered legal capacity to contract; or attempted to obscure or suppress the fact that the consumer did not have an unfettered legal capacity to contract.

            

Part F: Right to fair and honest dealing

40. Unconscionable conduct

The word “unconscionable” means shocking and morally unacceptable. This section prevents the use of physical force against a consumer, coercion, undue influence, pressure, duress or harassment, unfair tactics or any other similar conduct, in connection with any—

  • marketing of any goods or services;
  • supply of goods or services to a consumer;
  • negotiation, conclusion, execution or enforcement of an agreement to supply any goods or services to a consumer;
  • demand for, or collection of, payment for goods or services by a consumer; or
  • recovery of goods from a consumer.

 

It is also unconscionable for a supplier knowingly (intentionally) to take advantage of a consumer’s inability to protect his or her own interests because of physical or mental disability, illiteracy, ignorance, inability to understand the language of an agreement, or any other similar factor.

                

41. False, misleading or deceptive representations

See also sections 4(b); 24(2); 29 and 48(1) with regard to honest marketing. The supplier must not, by word or conduct:

  • directly or indirectly express or imply a false, misleading or deceptive representation concerning a material fact to a consumer;
  • use exaggeration, innuendo or ambiguity as to a material fact, or fail to disclose a material fact if that failure amounts to a deception; or
  • fail to correct an apparent misapprehension on the part of a consumer, amounting to a false, misleading or deceptive representation, or permit or require any other person( like an intermediary) to do so on behalf of the supplier.

 

A person acting on behalf of a supplier of any goods or services must not falsely represent that the person has any sponsorship, approval or affiliation; or engage in any conduct that the supplier is prohibited from engaging in under subsection (1). It is a false, misleading or deceptive representation to falsely state or imply, or fail to correct an apparent misapprehension on the part of a consumer to the effect, that:

  • the supplier of any goods or services has any particular status, affiliation, connection, sponsorship or approval that they do not have;
  • any goods or services:
  • have ingredients, performance characteristics, accessories, uses, benefits, qualities, sponsorship or approval that they do not have;
  • are of a particular standard, quality, grade, style or model;
  • are new or unused, if they are not or if they are reconditioned or reclaimed, subject to subsection (4);
  • have been used for a period to an extent or in a manner that is materially different from the facts;
  • have been supplied in accordance with a previous representation; or
  • are available or can be delivered or performed within a specified time;
  • any land or other immovable property:
  • has characteristics that it does not have;
  • may lawfully be used, or is capable of being used, for a purpose that is in fact unlawful or impracticable; or
  • has or is proximate to any facilities, amenities or natural features that it does not have, or that are not available or proximate to it;
  • the necessary service, maintenance or repair facilities or parts are readily available for or within a reasonable period;
  • any service, part, replacement, maintenance or repair is needed or advisable;
  • a specific price advantage exists;
  • a charge or proposed charge is for a specific purpose;
  • an employee, salesperson, representative or agent has the necessary authority to negotiate the terms of, or conclude, an agreement;
  • the transaction affects, or does not affect, any rights, remedies or obligations of a consumer;
  • a particular solicitation of, or communication with, the consumer is for a particular purpose; or
  • the consumer will derive a particular benefit if they assist the supplier in obtaining a new or potential customer.

 

It is permissible to refer to goods as new if those goods have been used only:

  • by or on behalf of the producer, importer, distributor or retailer; and
  • for the purposes of reasonable testing, service, preparation or delivery.

 

The prohibition by the Act of the use of innuendo, exaggeration or ambiguity is a much debated affair. The common law does not prohibit mere sales talk or the practice of “puffery”. An example would be Land Rover’s claim that it is the best 4×4×far. Such statement is not an objective fact, it is merely Land Rover’s own belief, and would be admissible under the common law. A claim that it is the safest vehicle on the road would however be to suggest a fact and that some objective testing took place to establish it.

               

What is the current position? Is puffery or a little over-exaggeration no longer admissible? According to Adv. NJ Melville the Commission will most likely refer this issue to the Advertising Standards Authority (ASA). There is also a Code of Advertising Practice that ASA enforces. Clause 4.1 thereof relates to the substantiation of claims by advertisers. It also prohibits the use of exaggerated claims that are likely to mislead consumers. Clause 4.2.2 of this Code permits puffery. It permits value judgements, matters of opinion or subjective assessments to be used, on condition that it is clear that only an opinion is expressed, and that the consumer won’t be misled by it. Suppliers should however exercise caution in the interim with exaggerated claims in their marketing or advertising.

            

42. Fraudulent schemes and offers

A person must not initiate, sponsor, promote or knowingly participate in the distribution of any communication that:

  • offers to supply, or enter into an agreement to supply, any goods or services, or offers to enter into a transaction, or invites offers to enter into a transaction; and
  • falsely states, implies or represents that: 
- the communication is authorised by another person; or
- the author of the communication represents another person.

 

This subsection prohibits the distribution of false communication. An arrangement, agreement, practice or scheme is a fraudulent currency scheme if it involves a person:

  • with the intent to defraud another person, representing that the first person is capable of producing currency by washing, dipping or otherwise treating any substance that is not currency with a chemical substance, or exposing it to an electrical charge, or to radiation of any kind; or producing currency, or increasing a sum of money, through scientific means, invocation of any juju or use of other invisible medium; or
  • making or issuing any currency, or making representations as being capable of doing so, unless the person is an authorised producer of that currency.

 

An arrangement, agreement, practice or scheme is a fraudulent financial transaction if it is a money laundering activity or if it involves any proceeds of such a specified unlawful activity. A fraudulent transfer of property or legal rights is also prohibited.

            

A person must not directly or indirectly represent, by false pretence or with the intent to defraud, another person to the effect that the first person is in possession of:

  • any property;
  • information relating to the whereabouts of any property or relating to any legal rights or potential legal claims; or
  • has the ability to effect the transfer of any property or to locate or determine the whereabouts of an individual.

The Minister may declare any arrangement, agreement, practice or scheme to be a fraudulent scheme.

                 

43. Pyramid and related schemes

The act classifies multiplication, pyramid and chain letter schemes together and section 43 refers to them jointly. All these schemes are prohibited outright. “Consideration’’ is defined in section 1 as meaning anything of value given and accepted in exchange for goods or services, including-

  • money, property, a cheque or other negotiable instrument, a token, a ticket, electronic credit, credit, debit or electronic chip or similar object;
  • labour, barter or other goods or services;
  • loyalty credit or award, coupon or other right to assert a claim; or
  • any other thing, undertaking, promise, agreement or assurance,

 

irrespective of its apparent or intrinsic value, or whether it is transferred directly or indirectly, or involves only the supplier and consumer or other parties in addition to the supplier and consumer. In this section ‘consideration’ has the meaning set out in section 1, except that it does not include:

  • the purchase of any goods at cost to be used in making sales, or not for resale;
  • the purchase of any goods in exchange for which the seller of those goods offers to repurchase the participant’s products under reasonable commercial terms; or
  • the participant’s time and effort in pursuit of sales or recruiting activities;

 

‘‘Participant’’ means a person who is admitted to a scheme for consideration.

Pyramid schemes contemplate an arrangement, agreement, practice or scheme in terms of which participants in the scheme receive a compensation, more particularly if participants in the scheme receive compensation derived primarily from their respective recruitment of other persons as participants, rather than from the sale of any goods or services.

A multiplication scheme exists when a person offers, promises or guarantees to any consumer, investor or participant an effective annual interest rate, as calculated in the prescribed manner, that is at least 20 per cent above the REPO Rate determined by the South African Reserve Bank as at the date of investment or commencement of participation, irrespective of whether the consumer, investor or participant becomes a member of the lending party.

A chain letter scheme is an arrangement, agreement, practice or scheme that:

  • has various levels of participation;
  • has existing participants canvassing and recruiting new participants; or
  • each successive newly recruited participant:
- upon joining is required to pay a certain consideration, which is distributed to one, some or all of the previously existing participants, irrespective of whether the new participant receives any goods or services in exchange for that consideration; and is assigned to the lowest level of participation in the scheme; and
-  upon recruiting further new participants, or upon those new participants recruiting further new participants, and so on in continual succession may participate in the distribution of the consideration paid by any such new recruit; and moves to a higher level within the scheme, until being removed from the scheme after reaching the highest level.

 

The Minister may declare any arrangement, agreement, practice or scheme to be a prohibited scheme as contemplated in this section.

Case Law Summaries and Articles

 

Can employees be dismissed for refusing to accept new terms and conditions of employment?

Can an employer dismiss employees because they refuse to agree to a change to their terms and conditions of employment? An initial answer may be, “yes”.

Read More >>>

 

Escape route: “Resignation with immediate effect”

The latest case in the ‘disciplining employees who have resigned with immediate effect’ saga has brought about more uncertainty as to whether an employee who resigns with immediate effect shortly before a disciplinary hearing can avoid disciplinary action and subsequent dismissal.

Read More >>>

 

Freedom of expression or incitement to commit an offence? A constitutional challenge

On 4 July 2019, the North Gauteng High Court handed down judgment in the case of The EFF and other v Minister of Justice and Constitutional Development and other (87638/2017 and 45666/2017) in which the EFF and Julius Malema (the applicants) sought to have s18(2)(b) of the Riotous Assemblies Act, No 17 of 1956 (Riotous Act) declared unconstitutional.

Read More >>>

 

Consolidated, comprehensive or general final written warnings

Regarding dismissal, according to the Code of Good Practice, “the courts have endorsed the concept of corrective or progressive discipline. This approach regards the purpose of discipline as a means for employees to know and understand what standards are required of them.

Read More >>>

 

 

 

 

 

 

Courses and Workshops

 

                                         

 
 

Employment Equity Committee Training

23 August 2019 (Fully Booked)

Emperors Palace: Convention Centre

29 August 2019 (Fully Booked)

Tsogo Sun: Century City: Cape Town

30 August 2019

Tsogo Sun: Century City: Cape Town

27 September 2019

Emperors Palace: Convention Centre

04 October 2019

Southern Sun: Maharani: Durban

Shop Steward Training

28 August 2019

Emperors Palace Convention Centre

Basic Labour Relations

04 September 2019

Emperors Palace: Convention Centre

Compensation for Occupational Injuries and Diseases Course

12 September 2019

Southern Sun: Maharani Towers: Durban

The OHS Act and the Responsibilities of Management

13 September 2019

Southern Sun: Maharani Towers: Durban

19 September 2019

Emperors Palace: Convention Centre

28 November 2019

Protea Hotel By Marriott Tyger Valley: Cape Town

Managing Day to Day Issues/ Problem Employees Full day workshop

20 September 2019

Emperors Palace: Convention Centre

27 September 2019

Tsogo Sun: Century City: Cape Town

AARTO and the Impact on Your Business

03 October 2019

Emperors Palace Convention Centre

Hazard Identification & Risk Assessment Course

18 October 2019

Emperors Palace: Convention Centre

21 November 2019

Tsogo Sun: Century City: Stay Easy: Cape Town

Workshop Incident/Accident Investigation Course

25 October 2019

Emperors Palace: Convention Centre

22 November 2019

Tsogo Sun: Century City: Stay Easy: Cape Town

  

 Our Clients 

 

Android App On Google Play

Android App On Google Play