THE CONSUMER PROTECTION ACT REVIEWED

Hennie van Eck

CONSUMER RIGHTS

FUNDAMENTAL CONSUMER

RIGHTS

To Equality

To Privacy

To choose

To disclosure

To fair marketing

To fair & honest dealing

Fair & reasonable

T’s & C’s

To fair value

quality & safety

GENERAL PRINCIPLES

“Consumer” means:

− any person

− small juristic person with asset value/annual turnover less than R2M

− to who goods/services are marketed to, or who buys

− including a user/beneficiary of goods/services

− who receives goods/services in the ordinary course of business

HALSTEAD-CLEAK V ESKOM 2015 GPPHC

Facts:

– Plaintiff, a cyclist, came into contact with a low-hanging live power line

– Plaintiff suffered severe electrical burns

– He sued Eskom

– He relied on sec 61 of the CPA i.e. strict liability

HALSTEAD-CLEAK V ESKOM 2015 GPPHC Legal questions:

- Does the CPA apply?

- Was he a consumer?

- If so, strict liability would apply

Held:

– He was a Consumer

– Goods were defective

– Eskom strictly liable i.t.o. CPA

– Eskom 100% liable for plaintiff’s damages

HALSTEAD-CLEAK V ESKOM 2015 SCA On appeal:

– Plaintiff was not a consumer i.t.o. the CPA:

• He did not have any transaction with Eskom as a supplier or producer of electricity in the ordinary course of Eskom’s business

• He was not using electricity or receiving it as a beneficiary

• It would have been different if he was at home

– CPA does not apply

– Strict liability not applicable

– Eskom not liable

GENERAL PRINCIPLES CONT

“Supplier” means:

− any person who markets/sells goods/services

− in the ordinary course of business

GENERAL PRINCIPLES CONT “Goods” means:

– anything marketed for human consumption

– intellectual property e.g. literature, music, photos, software etc

– a legal interest in land or immovable property

– gas, water and electricity

– includes used goods

See Vousvoukis v Queen Ace CC t/a Ace Motors below

GENERAL PRINCIPLES CONT

“Services” include:

− work performed by a person for direct/indirect benefit of another

– provision of education, information, advice or consultation except advice regulated i.t.o Financial Advisory and Intermediary Services (FAIS) Act

– banking services, underwriting or assumption of any risk by one person on behalf of another, except:

• Advice and intermediary services regulated by FAIS

• Services regulated by the Long-/Short-term Insurance Acts

TRANSACTIONS EXCLUDED

The following transactions are excluded from the CPA:

− goods and services supplied to the State

− not in the ordinary course of business

− to large businesses (> R2mil)

− credit agreements (NCA)

− employment services & collective bargaining agreements

DISCLAIMERS

Section 49(1) - any notice to consumers which purports to:-

- limit the risk or liability

- constitute the assumption of risk or liability

- impose an obligation on the consumer to indemnify the

supplier for any cause

- be an acknowledgement of any fact by the consumer

must be drawn to the attention of the consumer in a manner

and form as required by the CPA

DISCLAIMERS CONT

Section 49(2) - a notice i.r.o any activity or facility that has a risk:-

− of an unusual character or nature

− the presence of which the consumer could not reasonably be expected to be aware of or notice

− that could result in serious injury or death

• the supplier must draw the fact, nature and potential effect of that risk to the attention of the consumer

• the consumer must have consented by:

- signing or initialling the provision

- acting in a manner acknowledging the notice, awareness of the risk and acceptance of the provision

Disclaimers cont Section 49(3) - notices must be written in plain language

Section 49(4) - the fact, nature and effect of the notice must be drawn to the attention of the consumer:-

− in a conspicuous manner and form likely to attract the attention of an ordinarily alert consumer having regard to the circumstances

− at the time when the consumer enters into the

transaction, begins to engage in the activity or enters or gains access to the facility or is required or expected to offer consideration for the transaction or agreement

The CPA cannot be excluded by agreement/notice

DISCLAIMERS CONT

If the disclaimer is ambiguous the interpretation will favour the consumer

DISCLAIMERS CONT

HANSON V LIBERTY 2011 GPJHC Facts:

- Parking garage in Sandton shopping centre

- Plaintiff was a passenger in the car

- Disclaimer notice on island next to ticket machine

CONDITIONS OF PARKING AND PARKERS/ OWNER’S

RISK

The centre is not liable for any injuries to any person

- Plaintiff tripped on an uneven part of the parking area

- She sued the owners of the shopping centre

HANSON V LIBERTY 2011 GPJHC Held:

- Similar to “ticket cases”

- No express contract but quazi mutual consent

- Did the Plaintiff reasonably agree to the terms?

- Onus on shopping centre to prove she agreed

- Nature, place, wording and context important

- Objective test

- Notice more applicable to drivers of cars who enter

- Plaintiff, passenger, would not realise the notice is relevant to her

- Disclaimer not applicable

- Centre held liable

JACOBS V IMPERIAL 2010 SCA

Facts:

- Vehicle taken to garage by brother-in-law

- Notices x 3: Vehicles are left at owner’s risk

- Notices were prominently displayed

- Were also t’s & c’s on reverse of documents signed

- Vehicle stolen

- Owner sued garage

Held:

- Brother-in-law the owners agent

- Notices and t’s & c’s binding on owner

- Owner not seeing notices or not signing is no excuse

- Owner’s claim for loss of vehicle dismissed

RIGHT TO QUALITY GOODS & SERVICES

A warranty is implied in any transaction that goods are:

– reasonably suitable for their usual intended purpose

– reasonably suitable for specified purpose of consumer

– of good quality, in good working order and no defects

– usable and durable for a reasonable period

– compliant with SABS standards and/or any other legislation with which it must comply

RIGHT TO QUALITY GOODS & SERVICES CONT Section 53 defines "defect" as:

− any material imperfection in the;

• manufacture of the goods or components

• performance of the service

that renders the goods or the service less acceptable than generally would be expected

− any characteristic of the goods/components that;

• renders the goods less useful, practicable or safe

• than would be reasonably expected

PRODUCT LIABILITY

Section 61 (1) - the producer or importer, distributor or retailer of any goods is liable for any harm caused by:

− the supply of unsafe goods

− a product failure, defect or hazard in any goods

− inadequate instructions or warnings i.r.o any hazard arising from the use of any goods

PRODUCT LIABILITY CONT

Concept of "harm" is wide & includes:

− death or injury to natural person

− illness

− loss or physical damage to property (movable and immovable)

− any economic loss suffered from harm

PRODUCT LIABILITY CONT

Sec 61(2) - extends liability to the supplier of services who applies, supplies, installs or provide access to goods

Liability between parties in supply chain is joint and several

No negligence is required by anyone in the supply chain

Consumer must prove a causal relationship between the defect and the loss but no longer needs to prove negligence of manufacturer

Product Liability cont

Court has discretion to determine:

− causality i.e. was harm suffered as a result of the use of the goods/service?

− mitigation of loss

− the amount of the damages

− contributory negligence

Product Liability cont

Defences include:

− compliance with a public regulation

− defect was not present when goods/services supplied

− failure to follow usage instructions

− unreasonable to expect the retailer or distributor to have discovered the unsafe characteristic

− 3 year prescription period

VOUSVOUKIS V ACE MOTORS 2016 ECG Facts:

– Plaintiff purchased a used motor vehicle from Ace

– After 3 months the engine failed, no fault of the Plaintiff

– Ace replaced engine at its own cost

– 5 months later 2nd engine also failed i.e. after 8 months of purchase of vehicle

– Plaintiff sued Ace for breach of implied warranty of quality

– Plaintiff tendered return of the vehicle & claimed return of purchase price

– Argued the 2nd engine was replaced within the 6 month period in the CPA for repair, replace or refund

VOUSVOUKIS V ACE MOTORS 2016 ECG Held:

– Supply of 2nd engine was a repair not a supply

– The engine is a separate component but an integral part of the vehicle

– Ace paid for the 2nd engine thus not a supply thus the 2nd engine was not an exchange for consideration

– CPA not applicable to failure of 2nd engine

– Claim dismissed

BUILDERS WAREHOUSE CASES

– 2 Plaintiffs hurt by using ladders bought at BWH

– Sued BWH for injuries caused by product failure and supply of unsafe goods

– Claims in excess of R15M, pending, not yet finalised

– No case law as yet i.r.o product liability claims of this kind

– Defences available to Builders Warehouse e.g. the product was safe, failure to follow instructions, defect not present when ladders supplied etc

CONCLUSIONS

The CPA is wide but very much like the common law

The CPA will favour the consumer

Apply the general principles to test for relevance e.g.

- is the claimant a consumer

- is it in the ordinary course of business

Continue to apply the basic common law principles

CPA is more stringent

QUESTIONS

THANK YOU

For more information or a copy of the presentation, please feel free to contact me.

SHAKIRA AHMED

Tel: +27 41 396 9250

Email: shakiraa@jgs.co.za

This presentation is for general information and should not be

used or relied on solely as a legal or other professional advice.

No liability can be accepted for any errors or omissions nor for

any loss or damage arising from reliance upon any information

herein. Always contact your legal adviser for specific and

detailed advice.

DISCLAIMER