Most businesses ensure that their customers sign standard “Terms and Conditions” for service or goods delivery or in cases where customers want to obtain credit. Properly drafted and implemented terms and conditions prevent future disputes and provide the business with essential protection against non-payment and product or service liability.
The Consumer Protection Act 68 of 2008 (“the Act”) now makes many of the terms and conditions previously used by businesses illegal or unenforceable. Businesses who are unaware of the requirements of the Act might endure administrative fees if transactions are cancelled or even possible penalties.
The Act sets out fundamental consumer rights that places an obligation on each business owner and they need to be aware of the implications hereof and ensure that their standard terms and conditions of trade are aligned with the requirements of the Act.
Terms and Conditions apply
The main reasoning behind the Consumer Protection Act is to:
“promote a fair, accessible and sustainable marketplace for consumer products and services and for that purpose to establish national norms and standards relating to consumer protection, to prohibit certain unfair marketing and business practices, to promote a consistent legislative and enforcement framework relating to consumer transactions and agreements”
The Act aims to always firstly protect the rights of the consumer. The terms and conditions of trade of any business must therefore create such a marketplace for the consumer in line with the Act.
The first important requirement is set out in Section 22(2): terms and conditions have to be drafted in a way that a consumer with average literacy skills can understand the information. It must be made available to a consumer in plain and understandable language that makes it easy to comprehend. Legal jargon and incomprehensible words have to be avoided at all costs as well as any misleading use of language with the intention to deceive or confuse the consumer. Any use of this type of clauses will result in penalties for the business.
In terms of Section 56(1), all products supplied by the business are now sold with an implied warranty that the products are of good quality, free from any defects, safe and are reasonably suitable for the purpose for which they are sold and as specified in Section 55 of the Act. Importantly, the consumer has the right to return a defective product or a product that does not meet the necessary standards required of that product, having regard to the use to which they would normally be put and to all the surrounding circumstances of their supply, within six months of the transaction for either a replacement or repair of the product or a refund of the purchase price (Section 56(2)). The business’ terms and conditions may under no circumstances contradict these provisions of the Act.
Direct marketing and the cooling off period
Direct marketing means:
“to approach a person, either in person or by mail or electronic communication, for the direct or indirect purpose of—
(a) promoting or offering to supply, in the ordinary course of business, any goods or services to the person; or
(b) requesting the person to make a donation of any kind for any reason”
Section 16 of the Act specifies that a consumer who has signed an agreement as a result of direct marketing has the right to rescind the transaction by notice to the supplier within five business days after the later date on which the transaction was concluded or the goods were delivered. The Act also regulates in Section 11 how direct marketing may occur and how a business’ standard terms and conditions must be used to obtain the consent of clients for direct marketing purposes.
Return and Refund
Businesses are obliged to make provision in their terms and conditions for the return and refund to the consumer of the purchase price, where:
♣ The consumer rescinded the transaction during a cooling off period following the purchase or delivery of goods through direct marketing as set out above.
♣ The products supplied are defective or not of the standard or description as agreed to or don’t satisfy their intended purpose. The goods must be returned within ten business days at the supplier’s risk and expense.
Repercussion of non-compliance
As already stated penalties and administrative fees might be incurred if the business does not comply with the requirements of the Act. It is important to remember that a consumer may contest the business’ terms and conditions and challenge the validity of any transaction concluded on the basis thereof. A consumer may also approach a court to declare specific provisions or the entire agreement between the consumer and the supplier invalid and grant a cost order against the business.
These are only a few of the requirements provided for in the Act and it is of utmost importance that each and every business revaluate their relationship with their consumers in order to set appropriate terms and conditions in line with the Act and the business’ needs.
All business owners should approach a legal professional for guidance on their current terms and conditions to determine which areas need to be addressed to provide consumers with the fair environment envisioned by the Act.
Submitted by SchoemanLaw