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Small business and the CPA

Feb 21 2013 09:58 *Danie Strachan

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THE Consumer Protection Act, 2008 (“CPA”) entered into force in full on 31 March 2011. It introduced new consumer rights, whilst strengthening existing rights at the same time. A consumer for purposes of the Act does not only refer to natural persons but also includes small businesses. The CPA treats any juristic person whose asset value or annual turnover at the time of the transaction is less than R2m as a consumer.

When does the CPA apply?

The CPA applies to the sale of goods and the provision of services, provided the sale of goods or provision of services is concluded in the ordinary course of trade. This means that if an individual sells his family car, the CPA will not apply to that transaction.

Where do small businesses fit into this?

The CPA has a dual application to small businesses. On the one hand, small businesses qualify as consumers under the CPA. This means that such a small business will be able to enforce the rights that individual consumers have in terms of the CPA. On the other hand, when doing business with consumers, the SME will need to comply with the CPA like any other business.

Noteworthy Provisions

The Act contains standard product warranties, provides for strict product liability and makes labelling of goods and services more important.

The CPA contains many provisions relating to the marketing of goods and services. In particular, it provides for a standard cooling-off period if goods or services were promoted by way of direct marketing and also prohibits unsolicited direct marketing. The act regulates promotional competitions and loyalty schemes in detail.

It requires that any information given to consumers must be in plain and understandable language. Agreements concluded between suppliers and consumers must contain fair and just terms and conditions. Businesses will also have to register their business names at some point in the future. 

*Danie Strachan is from Adams & Adams. This article first appeared on the National Small Business Chamber website.

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