Besides the short-term effect of the Consumer Protection Act (CPA) on businesses, the long-term implications and indirect effects of the CPA should also be considered, says author of A Guide to the Consumer Protection Act and Van Eeden Attorneys director Evert van Eeden.

The product liability aspects of the Act will, for example, by transferring certain costs from consumers to suppliers, have a significant cost impact on industry. This will especially be the case if smaller businesses are compelled by distributors to comply with costly and sometimes unnecessary testing and certification procedures and insurance requirements, he says.

“This will affect both small and large concerns. Mechanisms should be put in place to deal with these issues, while also complying with the letter and spirit of the Act. A current concern relates to the implications of the fixed-term provisions of section 14 of the Act, in accordance with which Trade and Industry Minister Dr Rob Davies has fixed 24 months as the maximum duration for a fixed-term consumer agreement,” explains Van Eeden.

Section 14 is rendered applicable to certain pre- existing agreements by Schedule 2 of the Act. The problem is, however, that some of the relevant cross- references in the schedule and in section 14 do not match. In addition, as it is currently worded, it would appear to be the purpose of Schedule 2 to apply unqualifiedly retroactively to certain pre-existing agreements.

Many such agreements have been discounted, with the result that the unqualified retroactive application of section 14 would have impli- cations for relationships between the supplier and institutions with which the supplier may have negotiated the discounting financing arrangements, he notes.

Van Eeden adds that there is also an incorrect cross reference in section 14(3). His view is that, if the relevant references to subsections (1)(b)-(d) and (2) in Schedule 2 were appropriately amended, the question of unqualified application to pre-existing agreements could be effectively resolved. These types of teething problems and certain problematic aspects of drafting can be easily addressed, and the Act will increasingly impact positively on commercial practices and morality, he says.