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