Protection of Consumers outside the precepts of the Consumer Protection Act (CPA)

Protection of Consumers outside the precepts of the Consumer Protection Act (CPA)

Protection of Consumers outside the precepts of the Consumer Protection Act (CPA)

The Consumer Protection Act (CPA) contributes significantly in reducing the imbalance between contracting parties for those who are classified as “consumers” as defined by the Act.

A contract is defined as an agreement entered into by two or more persons with the serious intention of creating a legal obligation or obligations. As seen in the previous blog (How the Consumer Protection Act (CPA) reduces the imbalance between contracting parties), the CPA contributes significantly in reducing the imbalance between contracting parties for those who are classified as “consumers” as defined by the Act.

For ease of reference, consumers, for purpose of the CPA, are “natural or juristic persons (with an asset value or annual turnover of less than R2 million at the time of the transaction) to whom goods and services are promoted or supplied in the ordinary course of business and for consideration”.

Although not all individuals and businesses enjoy this protection of the CPA, there are in any event fundamental concepts in the law of contract along with the strict liability clause of the CPA that serve as protection for all individuals and businesses who enter into a contracting agreement within the ambit of a supplier and consumer/customer relationship:

Good faith

  • Good faith refers to a “standard of behaviour” rather than having the state of mind of being in “good faith”. This implies that when contracting in good faith, there is mutual accountability of the protectable interests of the other
  • Consumer law, in general, for instance, places a duty on the supplier to take care of a consumer’s property while in its possession. Thus, should the individual not be regarded as a “consumer” under the CPA to enjoy its protection, the individual would still be able to argue that the contract was not concluded in good faith as contractual parties are required to conduct their relationship in a manner consistent with good faith (bona fides).

Freedom of contract

  • There is a definite link between freedom of contract and the common-law concept of good faith as courts are increasingly willing to use such concepts to ensure that law of contract under the common law operates in a manner consistent with the Constitution of South Africa. The Constitution places a duty on the Courts to, amongst others, develop the common law to be consistent with the principles and values of the Constitution.
  • While freedom of contract allows autonomy in determining contract content and freedom with whom to contract, good faith, for example, prohibits discriminatory practices or unfair contract terms. Thus, even if the individual had freedom regarding whom to contract with, and on which term, the contract would only be enforceable if it is consistent with good faith. The concepts of both good faith and freedom of contract are supported by the principles and values embedded in the CPA as consumers have the right to fair and honest dealing and the right to choose (to mention but two). This means that all individuals and businesses will enjoy the same protection but under different parts of the law.

Sanctity of contract

  • This concept, also known as pacta sunt servanda, ensures that contracting parties honour their commitments as a matter of morality. For this concept to enforce a contract, the intention of both parties should be clearly indicated. However, in the case of inequality in bargaining power, it would not be fair to rely on this concept to ensure enforceability.
  • Sanctity of contract could protect individuals who argue that clients are not honouring their commitments or, on the other hand, individuals who argue that they were in fact in a weaker bargaining position; therefore, one cannot rely on this concept to ensure enforceability. This principle of correcting the imbalance in power is also in line with the values of the Constitution to promote social justice and such right enshrined in the Constitution’s Bill of Rights.

Privity of contract

  • Section 61 of the CPA creates strict liability for the producer, importer, distributor or retailer of any goods that caused harm as a consequence of supplying any unsafe goods; a product failure, defect or hazard in any goods; or inadequate instructions or warnings provided to the consumer pertaining to any hazard arising from the use of any goods.
  • In some states of America, this concept was regarded as a burden and many exceptions to the rule had to be established. Privity of contract means that only parties to a contract should be able to enforce rights or claim for damages. From an individual’s perspective, it seems unfair should the need arise to sue a manufacturer for harm caused without establishing negligence for instance. Fortunately, in South Africa, one can rely on the strict liability clause (absence of proving negligence) of the CPA even if the individual is not classified as a “consumer” as defined by the Act.
  • Should any contract exclude this liability on part of the producer, importer, distributor or retailer, the contract would not be enforceable.

Conclusion

Just because an individual or business is not classified as a “consumer” under the CPA it does not mean the individual or business cannot enjoy similar protection under the broader consumer law or other legislation. Ultimately, all individuals should reap the benefits of participating in a fair and reasonable marketplace, bearing in mind ethical behaviour and public interest. 

Whilst the main focus of the CPA is on compliance, our approach at SERR Synergy is to implement compliance in such a way that it provides business value to our clients and allows for improvement in efficiency and effectiveness by meeting compliance requirements within the broader context of consumer law. We assist enterprises to conduct business in an ethical manner and to promote and protect the reputation of their businesses.

About the Author: Monique van der Merwe completed her B.Consumer Science degree at the University of Pretoria. She joined our team in July 2018 and currently holds the title of “Information Compliance Advisor”. She specialises in compliance with the Consumer Protection Act (CPA) as well as POPI and PAIA. This includes compiling legal compliance reports and developing policies along with the other assessment aspects relating to consumer protection legislation. She drafts and submits PAIA manuals to the Human Rights Commission and also compiles and implements Data and Information Protection Reports to identify risks associated with information security in each department of an organisation.

References

Hutchison, D., Pretorius, C.J., du Plessis, J., Eiselen, S., Floyd, T. & Hawthorne, L., 2013, The Law of Contract In South Africa, 2nd edn, Oxford University Press, South Africa.

Van Eeden, E. & Barnard, J., 2017, Consumer Protection Law In South Africa, 2nd edn, LexisNexis, South Africa.

https://ilr.law.uiowa.edu/print/volume-103-issue-2/not-all-natural-modernizing-privity-to-allow-breach-of-contract-claims-for-mislabeled-food-products/

Consumer Protection Act 68 of 2008

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