By the time the Consumer Protection Act comes into force in October next year, suppliers can be sure that consumers will be aware of their rights, and ready to enforce them. History teaches us that happy customers do not complain. Companies will have to comply with the provisions of the Act so why not use it to your advantage and ensure that your customers are protected and happy, and mitigate the risk of future complaints.

The Act will bring about significant change to business in South Africa. It is easy to develop ‘compliance fatigue' with the flurry of new laws that companies must comply with. There are, however, a few important aspects of the Consumer Protection Act that suppliers should bear in mind when reviewing their practices and contracts.

A supplier cannot take money from a consumer for goods or services unless they reasonably expect to have the capacity to supply them. This will for instance impact the airline industry in relation to the overbooking of flights. Unless the consumer is offered goods or services of a comparable nature to satisfy their requirements, or if the consumer unreasonably refuses such an offer, a failure to provide the goods or services that a consumer has paid for means that the consumer is entitled to be refunded in full with interest and can also claim contractual and consequential damages, including economic losses. This is a fairly revolutionary provision which will require a reconsideration of the way that airlines do business in South Africa.

Another major change relates to the cancellation of fixed term contracts. A consumer can give 20 business days notice to the supplier to cancel a fixed term contract at any time. The consumer will only be liable for payment of any outstanding amounts on the contract up to the cancellation date together with reasonable cancellation penalties imposed by the supplier. The Minister may place a cap on what is ‘reasonable'. This provision relates to contracts where the consumer is an individual and does not apply to contracts between corporate entities. Credit agreements (but not the goods or services sold in terms of that agreement) which are covered by the National Credit Act are excluded from the Act and will not qualify as fixed term contracts for the purposes of this section. It will, however, affect subscription agreements, such as cell phone contracts, and other fixed term contracts, for example leases and gym contracts. Also noteworthy is that certain fixed term contracts (mostly depending on the length of the term) will need to comply with these provisions before the Act comes into force in October 2010. Service providers entering into fixed term contracts with individual consumers should therefore familiarise themselves with these changes and revise their contracts.

Suppliers should bear in mind that prepaid certificates, gift vouchers and credit notes cannot have an expiry date that is less than 3 years after the date of issue.

The Act also introduces an automatic implied warranty of quality on all products for six months. It is enforceable against all parties in the supply chain (the manufacturer, the distributor, the importer, the retailer) and suppliers cannot contract out of this warranty of quality. Consumers are given six months within which to return defective products, without penalty and at the supplier's expense, save for a small handling fee. They can then elect to have the product repaired or receive a refund for the price paid for that defective product. If the defective product causes harm, the supplier is liable for the harm without proof of negligence.

The impact of the Act is imminent. It is worthwhile pre-empting the full implementation of the Act in October 2010 and gain consumer confidence by offering customers that little something extra by protecting and respecting their rights before it is required by law.

By: Rosalind Lake, Associate at Deneys Reitz