Dingley Attorneys provides a high level overview of the Consumer Protection Act
The Act and the Regulations came into operation on 1 April 2011.
The main topics covered in the Act are:
- Consumers will be guaranteed equal access to markets
- Consumers’ privacy will be protected
- Consumers will have a right to choose suppliers
- Right to fair disclosure of information to customers
- Right to fair and responsible marketing
- Customers will be entitled to honest and fair dealing
- Terms and conditions need to be fair, just and reasonable and in plain language
- Consumers should expect fair value, good quality and safe products.
- Suppliers need to be accountable to customers
- Consumers have a right to be heard and receive compensation if they are unfairly treated or harmed by defective products
The Act only applies to consumers who are natural persons or, in the case of a juristic person, its annual turnover must not exceed the threshold set by the Minister, which is currently R2 million.
The Act provides that a transaction or agreement or its term or condition is unfair, unreasonable or unjust if it is excessively one-sided in favour of any person other than the consumer. While the Act details fundamental consumer rights, there is no equivalent provision for suppliers, be they producers, distributors or retailers.
Increased product or service costs will be the trade off for the increased protections afforded under the Act. Section 61, for example, introduces a no-fault liability for damage caused by goods. In the past, a causal link between a defective product and its negligent manufacture and harm suffered as a result of the negligent conduct had to be established. That is no longer the case. Now a causal link between harm, as specified under this section, and the defective product is all that is required to establish liability of the supplier. No negligence needs to be proved.
Quality Control and Insurance
Suppliers who have an increased risk of exposure would have to look at changing production and manufacture methods and improving quality control, no doubt with its cost implications. Suppliers will also need to have appropriate product liability insurance in place.
Important Exceptions to Strict Liability
While the Act provides for a no-fault liability, it does not provide for absolute liability. There are limited exclusions to liability which benefit distributors or retailers, not producers or importers. For example, where it is unreasonable to expect a distributor or retailer to have discovered the unsafe product characteristic, failure, defect or hazard having regard to that person’s role in marketing the goods to the consumer and the state of scientific and technical knowledge at the time the goods were under the control of that person or if the retailer followed the instructions for use of the product given to it by the person who supplied the product to the retailer.
A limiting provision is the definition of “harm” for which a person may be held liable. Harm is death, injury or illness of any natural person or loss of physical damage to any property and economic harm which results from that physical harm. Accordingly there is no liability for pure economic loss, for example, where a defect in the product is discovered resulting in a product recall and loss to supplier of profit from the sale of that product.
Harm due to Lack of Stock
A supplier must have stock of the product it is advertising. Should the supplier be out of stock, consumers are entitled to compensation. No consequential damages are payable where the shortage of stock was beyond the supplier’s control and the supplier took reasonable steps to inform the consumer of the shortage as soon as it was practicable to do in the circumstances.