Concerns in the 3rd draft of the Consumer Protection...

Retailers’ Association Submission

Retailers’ AssociationPrivate Bag 34

AUCKLAND PARK2006

19 August 2008

Attention: The Secretary of Parliament, Mr Johnny Ramrock c/o Marchelle WilliamsVia email: [email protected]; CC: [email protected]

Dear Mr Ramrock

RE: Consumer Protection Bill: Bill 19A (as amended by Bill 19B) of 2008: retail submission to NCOP

We thank you for the opportunity to give written commentary on the Consumer Protection Bill. As part of this submission, we also request the opportunity to make representations during the course of the National Assembly Public Hearings.

This submission will consist of three parts: an introduction, a summary of our key concerns and a detailed analysis in table format of all our concerns. The submission is made on behalf of Retailers’ Association, which is made up of the following organisations that operate as large national retailers as well as associated smaller independent franchise operations. It should be noted that some of the member businesses may also make supplementary submissions, in addition to this submission. Members of the Retailers’ Association are:

Ellerine Holdings Edcon (Pty) LimitedFoschini GroupJD GroupMass DiscountersMassmartMetcashNew Clicks Holdings GroupPick ‘n Pay Shoprite CheckersSmollan Group SA (Pty) LtdSpar Group Limited

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mailto:[email protected]


TruworthsWoolworths (Pty) Ltd

Part A: Introduction

The Retailers’ Association supports the socio-economic and human rights objectives that are the basis of the Bill. We welcome the Bill as means to protect the consumer market and the legitimate interests of stakeholders that participate in this market. In particular, the Retailers’ Association recognises the need to protect the consumer, particularly vulnerable consumers, whose rights must be balanced with the needs of business to pursue economic objectives that lead to economic growth and poverty alleviation. Our written representations are reflective of these objectives and of sustaining a strong and viable wholesale and retail sector in a vibrant and growing economy.

We recognise and acknowledge that the dti has engaged in an extensive consultative process with business in the drafting of the Bill, and has consequently made a number of amendments to the Bill thereby taking a number of businesses’ concerns into account. There are, however, a number of areas of the Bill that we believe still require consideration in order to ensure an effective and fair consumer market, and that the objectives of the Bill are met. These concerns are set out below in the form of key concerns, followed by a detailed analysis outlining more detailed issues of concern.

Part B: Key Concerns

The broad areas of concern are referred to in this section, but are dealt with in more detail in the table that follows this section.

1. Official Language RequirementOne of the issues that the dti made adjustments to, following the consultations with business was the official language requirement. As the Bill now stands, the plain and understandable language requirement remains whilst the official language requirement was deleted. These amendments were made as a result of what we submit was a persuasive argument by business: that the costs of providing all consumer related information in all the official languages would be so onerous that it would not be capable of implementation. Millions of documents are produced for consumers. To require all documentation to be available in all official languages would, we submit, create an extremely onerous regulatory burden, result in excessive costs to business, and have a negative impact on the environment.

By way of illustration, we attach as Annexure 1 two mock-up labels for baby food products, showing that the existing required information cannot even be accommodated in one language on a label due to space constraints. Should the official language requirement become law, it would be impossible to have a second language, yet alone any further languages on such a label.

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During the joint briefing to Parliament by the dti, it was clear that many of the Honourable Members of Parliament were concerned that the official language requirement had been removed. We submit that there are sound regulatory impact reasons for the removal. If, however, the official language requirement is to be reconsidered, we would request that this be done after a regulatory impact assessment has been conducted. The regulatory impact would be further minimised if the drafters were to narrow down the types of customer communication that should be available in the official languages, to only those types of communication that are absolutely essential.

2. Duplication and Overlap with Other LegislationFor business to thrive, as stable regulatory environment is essential, so that all parties know what are their rights and obligations, one of the objectives of this Bill is to unite fragmented pieces of legislation into a comprehensive and single piece of legislation and create this stability and certainty. The Bill, however, creates a piece of legislation that is both extremely broad in its application and also still overlaps with other pieces of legislation that will continue to apply alongside this Bill. This leads to uncertainty, and ultimately a denial of the very rights sought to be addressed in the Bill.

Despite the clear intention of the drafters to avoid duplication, this has not been reflected in the Bill primarily due to contradictions within the Bill. For example, section2(9) stipulates that where contradictions with other Acts exist, the Act that affords the consumer the most protection applies. However, section 5(3) provides for a regulatory authority to apply to dti minister to set aside consumer protection requirements if provisions overlap with that of the authority.

An example of the overlap is intermediary services under the Financial Advisory and Intermediary Services Act (“FAIS Act”). “Advice” that is regulated under the FAIS Act is excluded from the ambit of the Bill, but intermediary services are not. Given that the FAIS Act and its regulations already contain consumer protection provisions, it is suggested that intermediary services also be excluded from the Bill.

Similarly, credit agreements under the National Credit Act will be governed by this Act and also the Bill. It is understood that it was the dti’s intention to have the asset or the good that is financed under the credit agreement governed by the Bill, but the credit agreement governed by the National Credit Act. This is not stated clearly in the Bill, and we suggest this be clarified.

A provision in the Bill that is also not clear is the exemption for transactions above a certain threshold and goods in a “supply chain” relationship. This is detailed more fully in the detailed table that follows, but it must be emphasised, that the threshold is based on a value of a transaction. Given the nature of transactions between a large business (as a consumer) and a large business supplier, a transaction is often made-up of many smaller transactions and these could all be governed by one agreement. This would be the case where there is a continuous supply of services, such as a courier service. In some months, a transaction (forming part of the whole agreement) could fall below the threshold and in some months, it call fall above.

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The dti has indicated that it would not be possible to exempt businesses based on their annual turnover, but it is suggested that this be reconsidered as an annual turnover requirement would be far easier to ascertain than a transaction based requirement.

Having said this however, the threshold requirement alone will not exempt a transaction (as with the NCA), as the transaction must be one where the goods or services are supplied to a person in the supply chain and as per the requirements of section 5(2)(b)(ii). This would mean that a large or even a listed company that procures services of a supplier of goods that such company will use in its own business as an end user, will not be exempted. Whilst it is laudable to extend the provisions of the Bill to the company’s as consumers, this is not necessary as such business-to-business transactions are usually individually negotiated with both parties usually aware of their rights.

A final example is the overlap between what is regarded under this Bill as safe, quality goods and hazards, under section 63, which is also defined and covered under the Foodstuffs, Cosmetics and Disinfectants Act (and its Regulations) with different definitions of what is safe and hazardous.

3. Implied Warranty of QualitySections 20 and 56(2) provide that within 6 months after delivery of any goods to a consumer, that the consumer may return the goods to the supplier, without penalty, at the supplier’s risk and expense. On return, if the goods fail to satisfy the requirements that they are safe and of good quality, then the goods must be repaired or replaced or the amount paid must be refunded to the consumer.

It is clear that a 6-month return period is not appropriate for all types of products. It is certainly unreasonable to allow for a 6-month return period in the case of perishable food products that would have deteriorated significantly over the period. It is submitted, therefore, that the 6 month period should be replaced with a ‘reasonable period’ to be determined dependent on the nature of the goods.

Provision also needs to be made for the supplier or retailer to require that the consumer provides adequate proof of purchase when returning goods under this provision (and also under section 20).

4. Liability for Damage Caused by GoodsSection 61 of the Bill, introduces strict liability for any damage caused by goods. In contrast to the current position, which requires the consumer to prove fault on the part of the supplier, of either a negligent or intentional nature, section 61 provides for strict liability, in other words, regardless of fault on the part of the supplier or retailer.

This section will add immense costs to big business with respect to insurance, and will lead to an unsustainable situation in relation to smaller and medium sized businesses that cannot afford to insure themselves against this risk. In many instances, the middle-sized business will not withstand a strict liability claim, and will have to declare insolvency. A producer or importer, distributor or retailer will have to take out extensive insurance cover to provide

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for the risk of being liable to consumers in terms of this section. The costs of this will increase the cost of doing business, and the cost will inevitably be filtered down to the consumer.

We acknowledge the endeavour by the drafters to protect the consumer, particularly the more vulnerable consumer who does not always have access to justice when required to prove fault on the part of the supplier. We submit, however, that this problem is better addressed through ensuring accessible institutional structures, where vulnerable consumers are enabled and empowered to process their cases, rather than highly onerous solution of strict liability set out in section 61.

5. RegulationsMuch of the detail contained in the Bill is dependent on Regulations being drafted. Without these, it is very difficult to comment on some of the provisions in the Bill, for example what the prohibited period is under section 12 and the maximum term of fixed term agreements under section 14.

It is understood that the Regulations will be drafted early in 2009 (i.e. after the Act is made law but during the period when the Act is inoperative) but this will be too late, as businesses will need to prepare for implementation of the Bill and with most of the detail absent, businesses will not be able to do this.

6. Institutional Structures Provided for in the BillIn terms of the Explanatory Memorandum of the Bill, it indicates, correctly, that the ‘Bill aims to make redress accessible…’. This calls for simple, clear, expeditious and accessible procedures in order for the consumer to enforce his or her rights.

When explored further this gives rise to a number of implicit principles:

Parties should clearly know where to go to enforce consumer rights, and such places should be geographically dispersed so that people can access such services

The time that it takes to process disputes should be minimized Efficient and effective structures need to be in place that are capacitated and resourced to facilitate a fair

outcome Credible advisory and support services should be available for parties People should be able to access consumer justice without the need for legal support and the associated

financial expenses. Legal processes should be minimized where possible, except where matters are of such a nature that Court proceedings are required

Conciliation should be used as a first option for all disputes, failing which adjudication. Alternative dispute resolution should be encouraged as an alternative to legal processes

Sectors should provide their own dispute resolution services, provided they comply with the Act and are accredited to do so

An inspectorate would also be required in order to ensure that certain rights are reviewed and enforced5


Contrary to the intention of accessible consumer justice as set out in the Explanatory Memorandum, it is submitted that the institutional structures as currently designed will act as a barrier to the access of justice. The proposed institutional structure creates the opportunity for extensive time delays, excessive legalisation, forum shopping, duplication and confusion as to which forum should be used. Parties could be tied up for extremely long periods of time in ascertaining which forum to approach and in working their way through the forums. This would require large financial resources, and in many cases would lead to complainants failing to pursue cases due to the time and resources required. It is submitted that the Bill creates an opportunity to significantly enhance consumer rights in South Africa in order to give effect to the objects contained in the Constitution. This calls for a complete review of the institutional structures with fresh and empowered structures, which will ensure access to consumer justice in a modern South Africa. This will ensure that the consumer can access the rights embodied in the Act, and that the respondent is in a position to properly respond to the issues raised. It is submitted that the structures contained in the Labour Relations Act of the CCMA, inspectorate and Courts are far better suited for the purposes of ensuring accessible consumer justice, than that embodied in the Bill. We submit that serious consideration should be given to this issue.

In addition, and contrary to indications given by the dti, it is not stated that the Courts will be the only bodies entitled to hear disputes regarding contracts. The Bill does not limit the authority of the Tribunal and it may hear such disputes. It is suggested that this be clearly stated in the Bill in order to ensure that there is no confusion.

The above key concerns all contribute to increasing the compliance costs. A more detailed breakdown of the concerns can be obtained from the specific provisions set out in the detailed table. Ultimately, a simple, clear and accessible institutional framework is required.

Part C: Detailed Analysis of Concerns

What follows is a detailed analysis of outstanding concerns pertaining to the Bill. The first two columns identify the provision of the Bill, with the Comments column detailing the concern, and in some cases a proposed solution to address the concern.

Annexures 1 and 2 follow regarding a specimen label and suggested wording changes respectively.

RETAIL SUBMISSION ON CONSUMER PROTECTION BILL - DRAFT RELEASED BY dti IN APRIL 2008

Section Summary of provision Comment

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1. Advertisement

Definitions This definition is extremely broad. It would also cover, for instance, a label in clothing and even a letterhead.

The definition should be made clearer so that it is limited to only where the communication or representation is for actual advertising purposes.

Business name

Business names (and Chapter 4, part A) should be regulated in the Companies Act and Close Corporations Act (or such other Act as may precede these Acts). Only business names of entities or businesses that are not companies and close corporations should be regulated in this Bill, e.g. sole proprietors.

Clearly This definition was not in the prior drafts, but does not appear to be used in its context in the Bill, and its relevance is therefore questioned. It should be deleted.

Consumer It is understood that this definition now includes someone who uses particular goods irrespective of whether that person actually purchased the goods.

However what is not clear is how this will apply in the employer/employee relationship? For example, when an employee who uses (for example) a power tool that was purchased by the employer for use in the business, and the employee is injured as a result of the product being defective. The employee would have a claim against the Workman’s Compensation Fund, but the wide ambit of this definition would also provide for a claim in terms of this bill, which can surely not be the intention?

In discussions with the dti they have confirmed that the intention had always been to exclude such a situation.

Consumer Agreement

The relationship between Agreement and Consumer Agreement is unclear. It is recommended that the definition of Agreement be retained and where an

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Agreement does not apply to a specific type of transaction, e.g. a Franchise Agreement, this be specifically excluded in the relevant section (e.g. section 14).

Direct marketing

The definition has been amended to include approaching a person by “mail” or “electronic communication”. The latter is defined and is very broad. This will mean that telephone calls, faxes, sms’, emails etc to consumers are all forms of direct marketing. The previous definition only applied to marketing done in person or by telephone and it is suggested that it be retained as it was previously.

Electronic communication

With regards to “Bluetooth”, it is unclear as to how a retailer, service provider or direct marketer would be able to control content being sent to a consumer’s phone if their Bluetooth is activated in an area that receives Bluetooth signal.

Please see Annexure 2 for suggested wording regarding aligning this definition with the Electronic Communications and Transactions Act.

Goods This definition is very wide which will result in a number of overlaps with existing legislation and it is suggested that the scope of the definition be reduced in order to limit the scope of the Bill. For example, foodstuffs (for example as regards labelling) are adequately dealt with in the Foodstuffs, Cosmetics and Disinfectants Act (and its many Regulations). Hazardous substances are dealt with in the Hazardous Substances Act.

It is also not clear what constitutes “a legal interest in land or other immoveable property, other than an interest that falls within the definition of “service””. Would the owner’s interest in selling property fall within the definition?

There also needs to be an exemption for goods that are imported into the RSA and that comply with recognised international standards and best

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practices.

Please see Annexure 2 for suggested wording regarding ensuring that “goods” and “services” are mutually exclusive and also ensuring that financial products are excluded from the definition of “goods”.

Juristic person

The definition needs to make reference to companies and close corporations.

Producer The definition is very wide and would cover a retailer who orders clothing to be made in South Africa, even where the retailer actually does not make the clothes. Once the retailer applies its trademark to the clothing, it will be deemed to be the producer. This impacts the recourse in section 61.

Many goods are made specifically for a company bearing the company’s name (for example, “Woolworths’ foods”). The effect of the definition is that Woolworths would be seen to be the producer of all its foods. This will apply to many retailers who have “white label / house brand” products.

The definition, in our opinion, will result in too many parties being regarded as being the producer.

Public regulation

The word “in the Republic of South Africa” must be added at the end of the definition.

Retailer It is unclear why there is a separate definition of a retailer as a retailer falls squarely within the definition of a supplier.

Service As drafted, “service” will include the employee-employment relationship in that it includes “any work performed by one person for the … benefit of the other”. It is our understanding that the Bill is meant to exclude such relationships, as this falls is the realm of labour legislation.

Please see Annexure 2 regarding suggested wording.9


The intention behind the new sub-paragraphs under (c) is that insurance products be excluded, as confirmed by the dti at its joint briefing to Parliament in May 2008.

However, this exclusion does not go far enough in that it should also exclude services that are covered under FAIS but that do not constitute advice, such as services offered by an intermediary.

The words “or intermediary service” should be added after “constitutes advice” under part (c)(i) of the definition. Please see Annexure 2 regarding further suggested wording instead of this option.

Supply The inclusion of the words “sell by instalment” means that instalment agreements for the sale of goods, that fall under the NCA, will be regarded as being goods supplied to the consumer. Read with s 2(9), where the Bill offers greater protection to the consumer than the NCA on an issue, the Bill will prevail. On each issue (where both pieces of legislation do not apply concurrently), the Bill and the NCA will have to be compared to determine which piece of legislation trumps the other.

It is the intention of the dti that agreements covered by the NCA be excluded by the Bill, whilst the underlying assets will be protected by the Bill. However in reading of the Bill, this distinction is not made.

Trade description

The requirement that goods will have to have a trade description applied to them (as read with the requirements of s 24(4)) will be very challenging for retailers because some goods are very small (e.g. jewellery and stationery). This will most certainly add to the cost of the product. The type of goods that will require a trade description will be detailed in Regulations and without certainty at this stage as to what these goods are, it is difficult to determine the extent of the requirement.

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See also comment under s 110 (re offences) below.

Transaction (read with definitions of “consideration” and “agreement”)

The intention of the Bill is to provide a consumer with protection in the retailing, manufacturing and service environment. With the inclusion of this definition, the Bill is trying to regulate too many interactions between different parties, as it attempts to expand the reach of the Bill to interactions between people and voluntary associations (e.g. clubs – these could include social clubs, sporting clubs etc – associations and societies). It also extends the Bill into the realm of labour relations by attempting to regulate relations between members and Trade Unions.

Used goods Any goods returned by a consumer in accordance with the Act (and s 20 is of a concern here), will not be able to be classified as a used goods, regardless of the state in which they are returned.

This definition not acceptable, as a reputable retailer would never re-stock a returned item which had been used, as an un-used product.

In any event, the Bill no longer regulates the collection and sale of used goods as such. This will continue to be regulated under the Second Hands Goods Act (and its redraft currently under review).

State We note that this definition has been excluded in this draft, and due to the fact that this Bill applies to the State, there needs to be a definition so as to clarify what exactly is included, e.g. organs of State, para-statals etc.

Refund (new definition to be inserted)

It is recommended that a definition of “refund” be included in the Bill to ensure that there is certainty for all parties as to what is intended.

A suggested definition is “”refund” means to refund the consumer the amount paid for the goods as provided for in the relevant provisions, less any

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penalty amount or deductions allowed or provided for in the Act, and in the same form and manner as paid by the consumer, at the choice of the supplier”.

This is also included in Annexure 2 as regards “suggested wording changes”.

Unconscionable

It is recommended that part (b) of this definition be deleted and replaced with the following: “acting in bad faith, as between a supplier and consumer, particularly with respect to bargaining power so as to unreasonably take advantage of the consumer in the given circumstances”.

2.2(9)

Interpretation of the ActInconsistencies regarding the interpretation of a provision in the Act and another Act

According to the dti, it is not the intention for this Bill to regulate credit agreements; however this is not clearly stated.

The NCA will prevail as regards credit agreement issues, whilst it is understood from the dti that the goods that form the subject matter of the agreement will be regulated by the bill.

However it should be noted that where the credit provider and the supplier of the goods are completely different parties (e.g. a finance institution and a car dealer), the consumer will not be released from the credit agreement regardless of the issues that he may be experiencing with the goods.

It is suggested that the words (suitably amended) in the earlier draft be included in the Bill in section 5(2) as a new provision after subsection (c) being: “that constitutes a credit agreement under the National Credit Act but the goods or services that are the subject of the credit agreement are not excluded from the ambit of the Act”.

This suggested wording is also contained in Annexure 2.

5 Application of Act12


5(2)(b) The Act does not apply to any transaction if –(i) the value of the transaction exceeds the threshold value determined by the Minister in terms of section 6; and(ii) the goods and services are supplied to a person in the supply chain who, in the ordinary course of business –(aa) markets those goods for resale, irrespective whether to other persons in the supply chain or directly to consumers; or(bb) applies or utilises those goods or services in the production of other goods or services, or in the marketing of any goods or services, irrespective whether to persons directly in the supply chain or directly to consumers,

The commentary on section 6 below must also be considered when reading this provision.

Specifically regarding this subsection, where a transaction does not exceed the threshold value as per section 6, and where the goods are not within the supply chain relationship as per this subsection, the transaction will fall within the ambit of the Bill.

The effect of this is that a transaction by a very large company that (for example) contracts with a stationery company to provide stationery for its head office, will fall within the ambit of the Bill no matter the value of the transaction as the goods being supplied are to be used by the company (as a consumer) as the “end-user”. The transaction value could be very large (e.g. millions of Rands worth), and the parties would have in all likelihood have concluded a negotiated agreement, but the transaction will still fall within the ambit of the Bill.

A further example is where a company contracts with an IT company for the provision of their company’s IT requirements, from hardware, software and to the actual running of the company’s systems. These types of contracts, which are negotiated between the two companies typically are worth millions of Rands, and it would not seem logical that they are meant to be regulated by this Bill?

It is our recommendation that there be two exemptions in this subsection i.e. an exemption for transactions where the goods that are supplied (or services rendered) in a supply chain relationship and where the transaction value exceeds a threshold (not necessarily the same threshold as that at section 6) and that a standalone exemption be allowed for transactions that fall above a certain monetary value/threshold or based on the annual turnover of the consumer business.

General comment re s 5: Provision also needs to be made for excluding employment contracts and

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suggested wording is contained in Annexure 2.

6. Threshold determination it Is unclear how the threshold will apply. Will the total value of one transaction be taken into account, or will the value of the monthly business between the two parties be taken into account? The relationship between a supplier and a retailer (business to business) is such that in one transaction (under one continuous service agreement) the supplier provides the retailer with one item of low value and in a transaction the next day the supplier provides the retailer with a container of items, with an extremely high value. It seems illogical to have to assess each invoice value in order to determine whether or not those particular goods fall within the ambit of this bill or not.

In addition, without the monetary value of the threshold it is also not possible to fully comment on this provision.

12.

12(1)

12(2)

Regulation of time for contacting consumersA supplier must not engage in any direct marketing directed to a consumer at home for any promotional purpose during a prohibited period except to the extent agreed by the consumer.

The Minister may prescribe days, dates, public holidays

Practically, it will be very difficult to control when mail/post will arrive at a consumer’s home as it could arrive during a prohibited period. Post should be excluded from the ambit of this provision.

In many cases, sms’ and emails may too be sent by a direct marketer and despite when they were sent, they may (due to IT/systems issues) “arrive” during a prohibited period (or are opened by the consumer during a prohibited period). This should be exempted from the provision in so far as it is beyond the reasonable control of the direct marketer.

Many overseas companies target South African consumers and send them marketing material via SMS or email, which will arrive at the intended consumer’s phone or computer during a prohibited period due to the time differences between countries.

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or times of days when a supplier may not contact a consumer at her home unless he has requested or agreed otherwise.

Until such time as the Regulations are drafted, commentary on the effect of this provision cannot be given.

20.

20(1)(a)

20(2)

20(3)(b)

20(5)

20(6)(b) to (d)

Consumer’s right to return goodsThe consumer has a right to return unsafe or defective goods as set-out in s 56.

The consumer has a right to receive a full refund of any consideration paid for goods.

After goods have been supplied to, or at the direction of the consumer, the goods may not be returned if they have been partially or entirely disassembled, physically altered, permanently installed, affixed, attached, joined or added to, blended or combined with, or embedded within other goods or property.

Upon return of goods in terms of this section, the supplier, must refund to the consumer the price paid for the goods, less any amount that may be charged in terms of subsection (6).

S 56 refers inter alia to defective goods but not to unsafe goods. S 20(1)(a) must thus be amended to correctly reflect the provisions in s 56.

Would a credit voucher given to a consumer be regarded as a “refund” or must the refund be in cash? In addition, where consideration has been paid by way of a credit facility under the National Credit Act, the refund will be in the form of a credit to the credit facility.

Provision should also be made for goods that may not be returned once they have been worn or once their packaging has been opened/destroyed. In the latter case, subsection (6) would have to be amended accordingly.

Provision needs to be made for goods to be returned but the amount paid back to the consumer or credited to her credit facility must be at the current retail price of the good. This will then accommodate goods that have been marked down between the time that the consumer purchases the goods and returns them. If this situation is not provided for, a consumer would be able to return goods that are then marked-down and argue that (in the absence of a sales receipt or marked-down tag) that they paid the higher price for them.

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The amount that a supplier may charge a consumer as per subsection (5) is broadly provided for in this subsection.

Sections 20(6)(b) to (d) are unacceptable to business and are going to lead to abusive practices by the consumer, and will increase the black market in the likes of CD's, DVD's, Computer Games and Computer Software.

It will also result in the consumer “purchasing” an outfit for a particular function, wearing it to that function, and then returning it the next day.

With regards to subsection 6(b)(ii), this will entitle the consumer to open the goods, consume the goods to the extent the consumer determines necessary in order to decide whether they are acceptable to the consumer, and then to return partly depleted goods to the supplier and get a refund? (the meaning of the word “depletion” in this context is not understood).

Essentially a consumer could consume almost all of the goods before the consumer decides that they were not acceptable, and then return them to the supplier.

In terms of the definition of “used goods”, returned goods will not be regarded as such, but surely they cannot be regarded as new goods and sold as such? What other consumer would buy partly consumed goods as new goods? The supplier is therefore going to have to write these goods off. There are simply certain goods that a consumer should not be entitled to return.

Provision also needs to be made for suppliers to request adequate proof of purchase from consumers.

It is suggested that the following be inserted as a new provision (as section 20(7): “A supplier may require a consumer who returns goods in terms of this section, to provide adequate proof of purchase prior to making a refund to the consumer or taking further required action as per this section.”). This is also contained in Annexure 2.

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Also, provision needs to be made for the goods returned to not fall within the definition of the Second Hands Goods Act or its successor legislation.

Suggested wording by adding in a new subsection, being subsection (8): “Goods returned by a consumer to a supplier, in terms of this section or any other section of the Act are not used goods but are also not to be goods that fall under the Second Hands Goods Act or its successor legislation.” This is also contained in Annexure 2.

21.

21(2)(a)

21(3)(c)

Unsolicited goods or servicesGeneral comment

Goods become unsolicited if they are delivered incorrectly and the supplier informs the consumer of this and fails to collect the goods within 20 days.

If a person is in possession of unsolicited goods, the person is not liable for any loss/damage to the goods during the time they are in the possession/control of that person, other than loss caused by the person’s intentional interference with the goods.

This entire section is unfair towards suppliers, especially given the lack of clarity surrounding addresses in South Africa (no street names, difficulty of ascertaining correct addresses in informal locations etc).

Furthermore, this provision is extremely prejudicial to the actual consumer who has legally bought the goods, as in many instances this consumer would already have paid for the goods and when they are unsolicited, the consumer who has paid for the goods will be without possession. In terms of subsection (6)(a), it would appear as if this consumer would then have to validly prove rights to the goods and try and recover these goods – at whose cost?

As there are no exclusions, this will apply in a force majeure event, where the supplier is absolutely prevented from collecting the goods, through no fault of the supplier. This is unacceptable.

Negligence by the “person” should also be included in this provision.

22. Right to information in plain and understandable

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22(1)

22(2)

22(3)

Official languages

languageThe producer of a notice, document or visual representation that is required in terms of the Act or any other law, to be produced, provided, displayed to a consumer, must produce, provide or display that notice, document or visual representation –

(a) in the prescribed form (if any) for that notice, document or visual representation; or

(b) in plain language, if no form has been prescribed.

This provision sets-out how it will be determined if a notice, document or visual representation is in plain language.

The NCC may publish guidelines for methods of assessing whether a notice, document or visual representation satisfies the requirements of s 22(1)(b).

The word “producer” is used which could create confusion with the defined word “producer”.

It is also not certain how a visual representation can be in plain language in that it is defined as a “representation or illustration”.

What constitutes an “ordinary consumer” with “average literacy skills and minimal experience as a consumer”? It appears that the “ordinary” consumer will be regarded as one who has “minimal experience as a consumer”. This is a very subjective yardstick (e.g. does this mean it is a young person, a person from a rural area, a person who does not necessarily speak English etc).

But this is of no assistance in determining what type of person would fall into this category. Would a rural person who has limited opportunity to shop in bigger department type stores be regarded as such a consumer, despite the fact that this person might have years of experience of shopping generally in the rural area?

Similarly as with Ministerial Regulations, until the NCC has published guidelines the impact of the provision cannot be fully commented on.

It is our understanding that the requirement for 11 official languages may be reintroduced. Should this

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Comment indeed be the case, we would appeal for certain categories of documents to be exempted from this requirement, for example the pamphlets that come inside the boxes with imported products and appliances and the pamphlets inside medicine, as well as product labelling. Some goods are boxed, such as cellphones, and cannot be sold once opened. Should the official language requirement be imposed, cellphone boxes would have to be opened to insert the newly translated manual (as an example). Further, given the rapid change in technology, translated manuals would have a very limited life span as new manuals would constantly have to be drafted. Retailers would have to bear the cost of this as manufacturers (who are overseas based) will not do this.

23.

23(9)

Disclosure of price of goods or servicesIf a price as displayed contains an inadvertent and obvious error, the supplier is not bound by it after correcting the error and taking reasonable steps in the circumstances to inform consumers to whom the erroneous price may have been displayed of the error and the correct price.

What would constitute an inadvertent and obvious error? Must it be obvious to the consumer or to the supplier?It is recommended that the provision be amended to provide for bona fide price errors made by the retailer/supplier.

It is also not possible or reasonable to expect a supplier to inform all consumers who may have seen the erroneous price, that the price was wrong. Some consumers who may have seen the item may not be bothered about the item’s price (or about the item!) and do need to be informed about the price error. It would be reasonable to require that as soon as the error is brought to the attention of the supplier, that the supplier fixes the error by displaying the correct price and must make sure that any consumer who attempts to purchase the item at the incorrect price is politely informed of the error.

24.

24(4)

Product labeling and trade descriptionsThe Minister may inter alia prescribe the categories of

Commentary on this section is dependent on Regulations being drafted. Without the Regulations,

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24(5)

goods that are required to have a trade description applied to them as per s 24(5).

The producer or importer of any goods that have been prescribed in terms of s 24(4), must apply a trade description to those goods, disclosing the country of origin and any other prescribed information.

full commentary on this provision cannot be given.

Cognizance must also be taken of the extensive provisions under the Foodstuffs, Cosmetics and Disinfectants Act. There is no need to duplicate this Act and those matters that are dealt with in it (and its many Regulations) should be excluded from the ambit of the Bill.

Some items are too small to have a trade description applied to them and it would also not be possible to attach a tag to the item containing all the details prescribed. Examples of such items are: jewellery, sunglasses and stationery.

26.26(3)(b)

Sales recordsDetails that must be on a sales record:

(b) the address of the premises at which or from which the goods or services were supplied;

(g) the total price of the transaction before any applicable taxes.

General comment: sales records generated by large retailer have a limited number of characters that may be used on the records. The systems are not able to accommodate more characters.

Based on the aforementioned, it is not possible to include the full address. It is recommended that the following be inserted after the words “the address”: “or the name of the centre or complex wherein the retail outlet is situated”.

It is suggested that this be deleted as the sales vouchers already display the amount of tax and the total. This additional information is not necessary and due to the space constraints on vouchers, it is not possible to add more fields or text.

32.

a

Direct marketing to consumers at homeA person who is direct marketing any goods or services, and who concludes a transaction/agreement with

Despite the provisions of the heading, the body of the section does not refer to direct marketing that happens at the consumer’s home.

It is recommended that the words “to a consumer at 20


a consumer, must inform the consumer (in the prescribed manner and form) of the right to rescind that agreement as per s 16.

his/her place of residence” be inserted after the words “who is direct marketing any goods or services”. The words “at his her place of residence” must be added after the words “and concludes a transaction/agreement with a consumer”.

The manner and form of informing a consumer of her right to rescind the agreement is dependent on Regulations being drafted and sight of these is required before further comment on this provision can be given.

36.

36(1)

36(9)(a)

36(10)

36(11) (and also s 36(3)

Promotional competitionsGeneral comment.

Definition of a “prize”

The right to participate in a promotional competition must not be made subject to a further condition.

Subsection 35(5) read with the changes required by the context applies equally in respect of any prize or right to a prize conferred on a person as a result of that person’s participation in a promotional competition.

Children/minors are often soft targets for promoters and some form of protection needs to be given (over and above the protection that would be given under s 36(3)(b)(i)).

The definition needs to include the prize of having a consumer’s credit facility (as defined in the NCA) debit balance (if any) credited by a retailer in a certain amount, as a form of prize (i.e., account clearance)

The Minister in terms of s 120 will be required to regulate the prescribed period and until such time as the period is specified, one is not able to determine if the provision is reasonable or not.

Would a qualifying question to the consumer be allowed?

With respect, this provision is not clear. It is suggested that the provision (as adapted from s 35(5)) is stated in full at s 36(10) and not on the basis of “mutatis mutandis”.

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(c)(iii)). The Minister may prescribe a monetary threshold for the purpose of excluding competitions with low value prizes and also minimum standards for keeping records associated with promotional competitions.

The effect of this provision is dependent on the Regulations and in the absence thereof, one cannot comment fully on its effect. (Regulations will also prescribe the period of retention in terms of s 36(3)(c)(iii)).

39.

39(1)(a)

Agreements with persons lacking legal capacityAn agreement to enter into a transaction, or for the supply of any goods or services, to or at the direction of a consumer is void if the consumer is subject to the order of a competent Court holding that person to be mentally unfit and the supplier knew, or could reasonably have determined, that the consumer was the subject of such an order.

It is suggested that the words “or could reasonably have determined” be deleted as it is not known how a supplier could actually determine such information.

40.(1)

Unconscionable conductA person must not use physical force against an individual, coercion, undue influence, pressure or harassment, unfair tactics or any other similar conduct in connection with any of the matters listed under subsection (1).

The word “individual” should be replaced with the word “consumer”.

What would constitute “coercion, undue influence, pressure or harassment, unfair tactics or any other similar conduct”? These can be interpreted very broadly, and may be interpreted in different way by different consumers. These concepts could be very subjective and open to abuse by a consumer in attempting to have a term of a contract declared void or the contract declared void (as per s 52).

Annexure 2 contains suggested wording.

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40(1)(a)

40(1)(d)

40(2)

Marketing of goods and services.

A person may not use physical force, coercion, undue influence, pressure, harassment, unfair tactics or other similar conduct against an individual in connection with any demand for, or collection of, payment for goods or services by a consumer.

In addition to any conduct contemplated in subsection (1), it is unconscionable for a supplier knowingly to take advantage of the fact that a potential consumer was substantially unable to protect her own interests because of physical or mental disability, illiteracy, ignorance, inability to understand the language of

For example, would clever litigation tactics (which have been used in our legal system since inception) against a consumer could be regarded as “unfair tactics”.

If a retailer markets a “buy one product get another product free” would this be regarded as coercion? If you provide a consumer with a voucher of R100 to be used with their next purchase of R300 or more, would that be deemed to be coercion or undue influence? When are marketing tactics going to be seen to be clever marketing tactics, and when are they going to be held to be coercion or undue influence? These terms are so subjective, that each consumer is going to have a different view, depending of their personal experience.

Sections 129 to 131 of the NCA deal with placing “pressure” on a consumer regarding making a demand for payment of goods and the provision in the Bill should be deleted.

Furthermore, the Debt Collectors Act regulates the activities of Debt Collectors, and the Association of Debt Collectors (ADRA) would not tolerate any use of physical force etc by a debt collector.

There is no need for this entire sub section as it is adequately dealt with in current legislation.

Similarly, section 40(1)(c) and (e) would also be dealt with in the NCA, in so far as these relate to credit transactions.

Please see Annexure 2 for suggested wording.

How will this operate in reality? The purpose of protecting “weaker” consumers is laudable, but how will an objective determination be made as to whether a consumer was taken advantage of?

Should a sales assistant in a store suspect that a 23


40(3)

an agreement, or any similar factor.

Sections 40(1) and 40(2) apply to court proceedings.

consumer does not understand a potential transaction with the consumer based on ignorance, and ask the consumer if she understands the transaction, this could be seen as discrimination (and maybe unfair discrimination) and perhaps objectionable under s 8(2)(a) (as an example). How would a supplier thus have to treat a consumer?

Further, ignorance by a consumer or a party to an agreement has never been a defence in our law. This section will now allow ignorance to operate as a defence.

Over and above this, how is a shop assistant meant to assess the ability of a consumer (unless it is blatantly obvious)? They are not trained to do this.

This section is going to be abused by certain consumers.

Surely what applies to court proceedings can not be regulated in this Bill, but should be regulated in the relevant legislation, namely the Magistrate and High Court Acts respectively?

48.

48(1)

Unfair, unreasonable or unjust contract termsGeneral comment

A supplier must not -(a) offer to supply,

supply, or enter into an agreement to supply, any goods or services at a price that is manifestly unfair,

In reading this provision, it appears that free market principles are being challenged and the concept of “willing seller and willing buyer” is being ousted.

The purpose of the section is to protect consumers against abuse, but it is also extremely patriarchal.

Regarding subsection (1)(a), a manifestly unfair/unreasonable/unjust price or term that is unfair/unreasonable/unjust may appear to be so, but in the circumstances, may be fair. For example, a price may be higher than normal due to the consumer requiring a special order good to be made urgently or special delivery terms may have to be agreed upon between the parties due to the

24


unreasonable or unjust, or on terms that are unfair, unreasonable or unjust;

(b) market any goods or services, or negotiate, enter into or administer a transaction or an agreement for the supply of any goods or services, in a manner that is unfair, unreasonable or unjust; or

(c) require a consumer, or other person to whom any goods or services are supplied at the direction of the consumer, to waive any rights, assume any obligation, or waive any liability of the supplier, on terms that are unfair, unreasonable or unjust, or impose any such terms as a condition of entering into a transaction.

(2) Without limiting the generality of subsection (1), a transaction or agreement, a term or condition of a transaction or agreement, or a notice

consumer requiring a good to be delivered on short notice. In the normal sense, this may be unfair/unreasonable, but in the circumstances, it is not.This is also very subjective.

Parties are free to enter into a contract on the terms that they agree to provided that the terms are not against public policy.

Subsection (2)(a) provides that a term/condition of an agreement is unfair, unreasonable or unjust if it is excessively one-sided in favour of any person other than the consumer or the person to whom goods or services are to be supplied.

The bargaining power of parties is very seldom equal and it is true that in many cases, a supplier will have more power when negotiating a contract, than a consumer. It is also true, however, that a consumer is often willing to accept such terms if the consumer really wants the services or the goods. The consumer has this freedom of choice.

Many contracts require a consumer to waive certain rights, such as an exclusion of liability clause (which is dealt with s 49). If this is no longer permitted, suppliers will have to obtain extra insurance cover, and the costs of this will eventually be borne by the consumer.

The comments above under subsection (c) apply here.

In a store environment, a sales assistant often provides an opinion in response to a question of a consumer. Whether an innocent statement is to the detriment of the consumer will depend on the circumstances. What constitutes a “detriment” to a

25


to which a term or condition is purportedly subject, is unfair, unreasonable or unjust if, –

(a) it is excessively one-sided in favour of any person other than the consumer or other person to whom goods or services are to be supplied;

(b) the terms of the transaction or agreement are so adverse to the consumer as to be inequitable;

(c) the consumer relied upon a false, misleading or deceptive representation, as contemplated in s 41 or a statement of opinion provided by or on behalf of the supplier, to the detriment of the consumer; or

(d) the transaction or agreement was subject to a term or condition, or a notice to a consumer contemplated in s 49(1), and –

(i) the term, condition or notice is unfair,

consumer will be subjective and even a trivial matter may constitute a detriment (in the opinion of the consumer). It is very unclear how this will work practically in a store environment, i.e. how it will be implemented and monitored, and not abused.

See the comment that follows on s 49.

In a store environment, it will be difficult to prove that the term was brought to the attention of the consumer. Store staff turnover is very high and it is likely that the staff member concerned will no longer be in the employ of the supplier by the time that the dispute occurs.

Although every effort will be made to train store staff, but due to the poor literacy levels of the store staff themselves, they will often not be in a position to adequately explain the terms and conditions to the consumer.

Further, many different products are sold in stores and it will not be possible to effectively train staff with regard to the relevant terms and conditions (i.e. exemptions of liability) applicable to all goods.

26


unreasonable, unjust or unconscionable; or

(ii) the fact, nature and effect of that term, condition or notice was not drawn to the attention of the consumer in a manner that satisfied the applicable requirements of s 49.

49.

49(1) (read with 49(3))

Notice required for certain terms and conditionsAny notice to consumers or provision of a consumer agreement that purports to:

(a) limit in any way the risk/liability of the supplier or any other person;

(b) constitute an assumption of risk/liability by the consumer;

(c) impose an obligation on the consumer to indemnify the supplier/any other person for any cause; or

(d) be an acknowledgement

It will be impossible to draw every consumer’s attention to the package inserts of goods (such as cellphones, electronic equipment, electrical equipment, software etc) and explain the relevant provisions to them. Some goods (again, such as goods mentioned above) are imported and other products (such as software) will be shrink-wrapped, and will not be possible to be opened in store.

A manufacturer of software, for example, will never accept liability that the software is fit for purpose, and that it will necessarily meet the all requirements for which the person is purchasing it.

In terms of s 52, a Court has the power to declare a term or agreement void if the supplier fails to comply with the requirements in s 49(3).A consumer will be able to use this provision to his/her advantage by alleging that the supplier never brought the clause limiting liability, to her attention. A supplier will have to rely on store assistants to disprove this, and this will be difficult to do so for the

27


49(3)

of any fact by the consumer,

must be drawn to the attention of the consumer in a manner and form that satisfies the formal requirements of subsection (3).

A provision, condition or notice contemplated in subsection (1) or (2) –

(a) must be written in plain language, as described in s 22; and

(b) the fact, nature and effect of that provision must be drawn to the attention of the consumer:(i) in a conspicuous manner and form that is likely to attract the attention of an ordinarily alert consumer, having regard to the circumstances; and(ii) before the earlier of the time at which the consumer –(aa) enters into the transaction or

various reasons mentioned beforehand. The consumer will thus have a mechanism for getting out of a contractual arrangement should it suit her to do so.

The supplier carries this risk thus that some of its agreements could be declared void. This will increase its insurance premiums (as the supplier could be held liable for damages) and this cost in turn will be filtered down to the consumer, in accordance with standard business practices. Assuming that section 22 will be changed to accommodate all 11 official languages, we again appeal for certain documentation to be excluded from this section, such as pamphlets that accompany imported products, pamphlets inside medicine, pamphlets inside software etc.

This provision (subsection (b) will be exceptionally difficult to comply with at store level. It practically means that store staff will be required to break the seals on boxes in order to open them to access any documentation inside the boxes, so that the consumer may read such documentation prior to purchasing the product.

The store staff will need to be in a position to explain the contents of every single pamphlet to the consumer.

Furthermore the opening of the box will lead other consumers to believe that it is actually a returned item, as opposed to a brand new item.

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

(c) the consumer must be given an adequate opportunity in the circumstances to receive and comprehend the provision or notice.

50.50(1)

Written consumer agreementsThe Minister may prescribe categories of agreements that are required to be in writing.

In the absence of the Minister having prescribed what agreements must be in writing, one cannot comment on the effect of this section.

53.

53(1)

Definitions applicable to this part(a) Defect means:(i) any material imperfection in the manufacture of the goods or components, or in performance of the services, that renders the goods or results of the service less acceptable than persons generally would be reasonably entitled to expect in the circumstances; or

(ii) any characteristic of the goods or components that

The words “less acceptable than persons generally would be reasonably entitled to expect in the circumstances” can be interpreted very widely with one party’s view of reasonableness differing from another parties view. Would a material imperfection be present in a cheap CD player that does not produce a sound that is as good as a more expensive one?

Similarly, the words “less useful, practicable or safe than persons generally would be reasonably entitled to expect in the circumstances” are also very wide and open to interpretation. Would a toaster be considered to be less useful if it does not toast as quickly as another brand of toaster?

29


renders the goods or components less useful, practicable or safe than persons generally would be reasonably entitled to expect in the circumstances.

(c) Hazard means:(i) a design characteristic that -has been identified as, or declared to be, a hazard by or in terms of any applicable public regulation; or

(ii) presents a significant risk of personal injury to any person, or damage to property, when the goods are utilized.

(d) Unsafe means:that, due to a design characteristic, failure, defect, or hazard particular goods present an extreme risk of personal injury or property damage to the

The expectations of usefulness will also vary from person to person, and thus this measurement will be very subjective.

It is suggested that the words “intended manner or to the intended effect” be replaced with the following: “manner for which they were produced or manufactured”.

What is a “design characteristic”? Is this (for example) a glass vase that is designed in a certain shape but which could cause injury to a person when trying to clean it as it is a very narrow vase and could crack when cleaning?

As regards foods and hazards (and assuming that foods will not be exempted from the ambit of the Bill and the Bill will overlap with the Foodstuffs, Cosmetics and Disinfectants Act), it is suggested that the following changes be made to the definition of a “hazard”:

- delete the words “a design characteristic that” in the lead-in of the definition and add-in the word “a characteristic that” at the beginning of both (i) and (ii);

- add-in a new subsection (iii) as follows: “ a biological, chemical or physical agent in, or in condition of, food with the potential to cause an adverse health effect.”

The word “properly” should be added before the word “utilized”.

Again, what is a “design characteristic”?

The definition of “unsafe” must also be amended to exclude goods that have become unsafe due to abuse or misuse of a product. It is thus suggested

30


consumer or to other persons.

that the following be added at the end of the existing definition: “except where the goods have been abused or misused by a consumer”.

It is also suggested that food safety be dealt with separately to other goods and in this regard, the following (as per the should be added at the end of the definition of “unsafe” (as above), which reads: “ and concerning food safety , unsafe means that there is no assurance that food will not cause harm chemically, biologically or physically, to the consumer when prepared, used or eaten according to its intended use”.

Alternatively, food should be excluded from the ambit of the Bill and should continue to be dealt with under the Foodstuffs, Cosmetics and Disinfectants Act.

Based on subsection (1)(a)(i) of the definition of a defect, this could not be regarded as “unsafe” in the normal use of the word. Also, the definition of a “failure” does not refer to anything that is unsafe. Either these two definitions must be amended, or the definition of “unsafe” must be amended.

55.

55(2)

Consumer’s right to safe, good quality goodsExcept to the extent contemplated in subsection (6), every consumer has a right to receive goods that –(a) are reasonably suitable for the purposes for which they are generally intended;(c) are of good quality, in good working order and free of defects;

In many cases, a consumer may purchase goods that are cheaper than better quality goods. In such circumstances, the consumer cannot expect “bargain” goods to be of the same quality as their more expensive and sophisticated equivalents.

Does the requirement that the goods must be free of defects mean that the common law principles of voetstoots will no longer apply?

Based on the wording of subsections (5) and (6), it seems that voetstoots will no longer be applicable unless the requirements of subsection (6) are met.

Subsection (5) also goes further than normal 31


55(3)

(c) will be useable and durable for a reasonable period of time having regard to the use to which they would normally be put and to all the surrounding circumstances of their supply; and

(d) comply with any applicable standards under the Standards Act or any other public regulation.

In addition to the right set out in subsection (2)(a), if a consumer has specifically informed the supplier of the particular purpose for which the consumer wishes

voetstoots would, in that defects include latent and patent defects.

Thus, if the consumer is not expressly informed about any defect and the consumer has not expressly agreed to accept the goods in that condition or knowingly acted in a manner consistent with accepting such goods in that condition (whatever this may mean), the goods cannot be purchased voetstoots. This will especially be applicable to second-hand car sales. How will a “reasonable period of time” be determined? This period will be variable depending on the type of goods that are being referred to, and whether they are of a cheaper or of a more expensive quality.

The words “and to all the surrounding circumstances of their supply” should be deleted.

How will it be determined whether the supplier acted in a manner consistent with being knowledgeable about the goods? In a large retail store, a store assistant may have a basic knowledge of the goods on sale (despite every effort made to educate store staff) but when does this meet the requirement of being “knowledgeable”?

The Standards Act has numerous voluntary standards, e.g. for tomato sauce. However, as these are not compulsory standards, one is not obliged to comply with the standard. Does this now make all SANS standards compulsory? If so, it removes all competition from the market place and stops product innovation. All tomato sauce (as an example) will be exactly the same. Thus no benefit to the customer in terms of choice and variety.

The words “by the producer” should be inserted after the words “reasonably be anticipated”.

See comments above.32


to acquire any goods, or the use to which the consumer intends to apply those goods, and the supplier – (a) ordinarily offers to supply such goods; or(b) acts in a manner consistent with being knowledgeable about the use of those goods;the consumer has a right to expect that the goods are reasonably suitable for the specific purpose that the consumer has indicated.

56. 56(1)

56(2)

Implied warranty of qualityIn any transaction or agreement pertaining to the supply of goods to a consumer there is an implied provision that the producer or importer, the distributor and the retailer each warrant that the goods comply with the requirements and standards contemplated in s 55, except to the extent that those goods have been altered contrary to the instructions, or after leaving the control, of the producer or importer, a distributor or the retailer, as the case may be.

Within 6 months after the delivery of any goods to a consumer, the consumer

It will not be possible to have such an implied warranty. In effect, this means that all goods are sold free of defect. In the modern world with mass produced goods, this would be unrealistic, even where every effort is taken to ensure that goods are free from defect, there may be the chance that one item may have a defect.

If it were possible to supply 100% defect fee products, then it would not be necessary for recall procedures.

A warranty also means that the consumer has a right of recourse against the supplier where the goods do not comply with s 55.

Read with s 61, a producer, importer, distributor or retailer of the goods concerned will be strictly liable to the consumer for harm as per s 61(6).

A blanket 6-month period for all goods is not appropriate. The provision should be amended to provide for a right of return subject to the type of the good. Some goods are more durable than others and some are more prone to defects than others.

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56(3)

may return the goods to the supplier, without penalty and at the supplier’s risk and expense, if the goods fail to satisfy the requirements and standards contemplated in s 55, and the supplier must either – (a) repair or replace the failed, unsafe or defective goods; or(b) refund to the consumer the price paid by the consumer for the goods, at the option of the supplier, subject to subsection (3).

If a supplier chooses in terms of subsection (2) to repair any particular goods or any component of any such goods, and within 3 months after that repair, the failure, defect or unsafe feature has not been remedied, or a further failure, defect or unsafe feature is discovered, the supplier must replace the goods, or refund to the consumer the price paid by the consumer for the goods.

Each product should have a stipulated period for return, depending on the type of product.

Again, there cannot be a blanket 3-month period. After the goods have been repaired, it will depend on the extent of the repairs that were required in the first place, as to how long the goods should function free of defect.

Where bigger goods are involved, such as a motor vehicle, it can happen that defects do occur and re-occur. It could financially ruin many legitimate car dealers if they have to replace the vehicle or refund to the consumer the price paid for it.

Provision also needs to be made for suppliers to request adequate proof of purchase from consumers.

It is suggested that the following be inserted as a new provision, as section 56(5): “A supplier may require a consumer who returns goods in terms of this section, to provide adequate proof of purchase prior to making a refund to the consumer or taking further required action as per this section.”


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Suggested wording by adding in a new subsection, being subsection (6): “Goods returned by a consumer to a supplier, in terms of this section or any other section of the Act are not used goods but are also not to be goods that fall under the Second Hands Goods Act or its successor legislation.” This is also contained in Annexure 2.

59. Recovery and safe disposal of designated products and componentsIf any public regulation prohibits the disposal or deposit of any particular goods or any components, remnants, containers or packaging of any goods into a common collection waste system certain persons must accept the return of the goods.

It is suggested that the wording of subsection (b) be amended as follows:“any person who supplied goods of that kind to the consumer, must accept the return of any such good or goods, components, remnants, containers or packaging from that consumer, without charge to the consumer. The said supplier shall be entitled to require proof of the supply from the consumer in the form of a sales record, as contemplated in section 26, before it is obliged to accept the return;”

61. Liability for damage caused to goodsExcept to the extent contemplated in subsection (5), the producer or importer, distributor or retailer of any goods is liable for any harm, as described in subsection (6), caused wholly or partly as a consequence of –

(a) supplying any unsafe goods;

(b) a product failure, defect, hazard in any goods; or

(c) inadequate instructions or warnings provided to the consumer

This section introduces strict liability, which is going to add immense costs to business with respect to insurance. In many instances, the middle-sized business will not withstand a strict liability claim, and will have to declare insolvency. Small street and flea market traders will completely ignore this clause, which will result in only big business taking cognisance of this provision, and being held strictly liable.

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61(5)(b)

61(5)(d)

61(6)(d)

pertaining to any hazard arising from or associated with the use of any goods

irrespective whether the harm resulted from any negligence on the part of the producer, importer, distributor or retailer as the case may be.

Liability of a particular person does not arise if the alleged unsafe product characteristic, failure, defect or hazard –

(i) did not exist in the goods at the time it was supplied by that person to another person alleged to be liable; or

(ii) was wholly attributable to compliance by that person with instructions provided by the person who supplied the goods to that person, in which case para (i) does not apply.

A claim for damages must be brought within 3 years of the listed circumstances

These defences are not practical as a supplier would have to rely on the consumer providing it with the required information in order to use the defences.

As concerns food, this is too long a time period. Food products, especially perishable foods are consumer with in days of purchase. After 3 years it will be very difficult to investigate and mount a defence. Also if something is wrong, it is in the community’s interest that the ‘fault’ is investigated and corrective action taken immediately – waiting 3 years is irresponsible.

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Harm for which a person may be liable in terms of this section includes any economic loss that results from harm contemplated in paragraphs (a) to (c) above (i.e. death/injury to a natural person, illness of a natural person, any loss of or physical damage to any property (moveable or immoveable))..

To include economic loss (technically consequential damages) exposes suppliers to huge damages claims. In the case of smaller suppliers, one such case could ruin its business. Proving economic loss is technical, and often difficult, resulting in expensive litigation.

A producer or importer, distributor or retailer will have to take out extensive insurance cover to provide for the risk of being liable to consumers in terms of this section. The costs of this will increase the cost of doing business, and the cost will inevitably be filtered down to the consumer.

General comment: It is also suggested that provision be made for a consumer’s duty to mitigate against loss, harm or damage. Mitigation of loss is a well known requirement in our law and this duty must be explicitly provided for in addition to the court’s authority to enquire as to whether the loss was mitigated (as per subsection (7)(a)) and it is suggested that the following be added after subsection (7):

“(8). A consumer must ensure that she/he has taken all steps necessary or required to mitigate against any of the harm provided for in this section.”

69 Enforcement of rights by the consumerSets out a list of the bodies to which a consumer may refer a dispute.

Clear direction should be provided as to which forum should be used for which right. S (1)(d) is potentially problematic as it provides for residual jurisdiction for ordinary Courts on consumer issues. This has created a very confusing and time-consuming situation in other jurisdictions (such as labour where the role of the specialist Labour Court and the ordinary Courts have come into conflict with different judgements on the same matter) and should be guarded against. Ordinary Courts should have a residual right in terms of the common law, and should not have any overlapping jurisdiction on rights provided for in the Bill.

37


It is unclear how the provisions of the Bill will operate in circumstances where the parties have entered into an agreement that has dispute resolution mechanisms providing for example for arbitration.

70 Alternative Dispute ResolutionTermination of Alternative Dispute Resolution processes, or confirming of agreements in the High Court.

Where parties reach agreement, it is practically impossible for the consumer to enforce the agreement in the High Court through obtaining a consent order in terms of s 74. Legal support is required, and it is likely that in circumstances where the consumer lacks sufficient funding, that justice will not be done. Both to process the consent order through the Court, and to enforce the order in the event of default requires funding. In addition, the vulnerable consumer is unlikely to be able to provide security for costs, required by the sheriff of the court, before enforcement can take place. A big benefit of alternative dispute resolution, is an inexpensive and expedited procedure. This is undermined by the requirement to confirm the order in the High Court. A different solution is required regarding enforcement of orders.

71 Initiating a complaint to the National Consumer CommissionPersons may file complaints, or the NCC can directly initiate a complaint when directed by the Minister or at the request of the provincial authority, another regulatory authority or accredited consumer protection group.

There are no time frames in place for the referral of the dispute to the NCC. This is required in order to ensure greater business certainty. It is submitted that a time-period of 60 days should be provided for from the date of conduct, which is alleged to constitute an infringement of the Act.

72 National Consumer Commission InvestigationsProvides that the NCC can

It is not clear when a matter should be referred to the NCC or to the other bodies. It seems possible

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issue a notice of non-referral, or refer the complaint to an ADR agent, provincial consumer authority or consumer court or an inspector to investigate.

that a party could go backwards and forwards between the various bodies and not obtain any form of redress.

73 Outcome of InvestigationProvides for various outcomes of investigations, including the referral to the Consumer Court.

The referral to the Consumer Court permits either party, without input of the other, to request the matter be referred to the Tribunal. The Tribunal has discretion on whether to agree to this request, but if not, the Consumer Court must in terms of subsection (5) conduct proceedings consistent with the requirements of the Tribunal. This appears to be very difficult as it is unlikely that composition of the Tribunal and Consumer Courts will be similar and that the rules of the two bodies will be aligned.

It is submitted that there should be the right of the respondent to respond to the investigation.

74 Consent ordersOnce the NCC has investigated matter, then the respondent and NCC can agree to an order, which can be made an order of the High Court.

It is noted that in the absence of an award of damages, the complainant need not agree to an order in order for it to conclude the complaint.

There is a typographical error in subsection (1) line 2 which reads “the respondent agree to and should read ‘the respondent agrees to”.

75 Referral to TribunalThe complainant may refer the matter to the consumer court in the province in which the complainant resides, or where the respondent has its principle place of business, or the Tribunal.

This allows for forum shopping and the associated problems therewith. Far tighter referral proceedings are required.

There are no time limits for the application to refer the matter to the Tribunal, the setting down or hearing of the matter by the Consumer Court or Tribunal, which would be desirable.

The establishment, status, composition and powers 39


and duties of the provincial Consumer Court are not provided for. Bearing in mind the importance of these entities as they can substitute that of the Tribunal, it is not desirable that they should be unregulated in this Act.

There are no guidelines on how the Tribunal must make its decision, thereby making it very difficult for the supplier to adequately respond. Must the Tribunal make a decision on the basis of equity, fairness or right?

76.76(1)(c)

Powers of a CourtIn addition to any other order that it may make under this Act or any other law, a Court considering a matter in terms of this Act may –award damages against a supplier for collective injury to all or a class of consumers generally, to be paid on any terms or conditions that the Court considers just and equitable and suitable to achieve the purposes of this Act.

It also seems that a punitive costs order may be made against a supplier to satisfy the requirement of “achieving the purposes of the Act”. Punitive costs orders are not part of our law.

There is no limitation on the damages that can be awarded in terms of this Act. This appears to be inconsistent with other jurisdictions and it is not clear what this means in relation to the status of the Court / Tribunal.

79.

79(2)(b)

Identification of supplierGeneral comment.

A person doing anything contemplated in subsection (1) must include inter alia a

How does this system (s 79 to s 81) intend to operate with the Companies Act? It appears to be duplication.Many businesses will have to register their “trading as” names where there are not able to benefit from the transitional provisions. This will have a financial and administrative impact on businesses, which will not only have to incur registration (and ongoing) costs, but reprint all business stationery.

Would “primary place” include “registered office”?

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statement of the primary place at or from which the business is carried on, on the listed documents, as well as (where the activity is carried on under a business name), the name of the person to whom that business name is registered.

To whom does the following refer: “name of the person to whom that business name is registered”? Would it be referring to the shareholder of the business/company/close corporation?

80.

80(4)

Registration of business namesIf during the time that a business name is registered to a person, the Registrar, on reasonable grounds, believes that the person has not been carrying on business under that name for a period of at least 6 months, the Registrar will take the steps as per subsection (4).

Many companies in the past have been registered in order to protect a name (as opposed to registering a defensive name). These companies are dormant and would thus not be carrying-on business for a period of at least 6 months. Provision needs to be made for these companies to continue to exist (or subsection (4)(a) must make provision for registration for name protection purposes to be a valid reason/reasonable explanation (as per subsection (4)(b)(ii) not to cancel a company’s registration). It is also not clear how the regulation of business names will impact on defensive name registrations made under the Companies Act.

Even companies that are not dormant may not trade for at least a period of 6 months. In any case, how will the Registrar know that a company has not carried on business for a period of at least 6 months?

81.81(2)(b)

Criteria for business namesA business name must not be the same as, or confusingly similar to the names as per subsection (b)(i) and (ii).

Under the Companies Act, the Registrar is not required to assess this and there are also no terms of reference to do so. This should also apply under this Bill i.e. the Registrar should not be required to assess this.

A further subsection should be added to provide for a business name not be the same or confusingly similar to a defensive name.

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83 Co-operative exercise of concurrent jurisdictionCo-ordination of the functions of the National Consumer Commission and the provincial consumer protection authorities.

This section is problematic in its entirety as it relies on co-ordination, co-operation and integration when there is no real authority on the part of the NCC to require same, and no real obligation or incentive on the part of the provincial authority to co-operate. There is no co-ordinated quality control. It is submitted that this creates a system of duplication and inefficiency, which is unacceptable. A preferable approach would be to centralise all provincial functions under the office of the NCC, making the NCC accountable for services and standards throughout the country.

84 Provincial Consumer Protection AuthorityJurisdiction of the provincial consumer protection (“PCP”) authority.

While a number of functions are permitted by the PCP Authority, it is not clear on its accountability, structure, composition and status. The only reference to this is in the definition section of the Bill which defines the PCP Authority as “a body established within the provincial sphere of government, and designated by the responsible Member of the Executive Council of a province to have general authority to deal with consumer protection matters within the province”. Due to the relationship of this PCP Authority to the provincial courts and the NCC, it plays an important role in the institutional structures. It is submitted that it is far from clear what is the mandate of the Authority and how it is structured, and how it is funded. In addition, there is no direction on how parties can contact and access services of the PCP Authority, which is unacceptable bearing in mind that this PCP Authority is intended to be one of the key interfaces between parties and the State. This is exacerbated by the fact that it is contemplated in the Bill (see for example s 83) that there are circumstances where no PCP Authority exists.

85 Establishment of 42


National Consumer CommissionEstablishment of NCC as organ of State outside of public service.

The NCC is not established as a juristic person, it is therefore not clear whether it has juristic standing.

It is noted that the concept of a Board has been removed from the previous draft of the Bill, which is a positive development as the composition and functions of the previous Board was problematic. However, it is now not clear to whom the NCC reports, and there appears to be no governance or accountability provision despite an indication in the Explanatory Memorandum that the NCC is accountable to the Minister.

86 Minister may direct policy and require investigation This provision, particularly (b) may limit the

independence of the NCC.

87 Appointment of CommissionerCriteria, term of office, responsibilities and delegation by Commissioner

The qualification of the NCC Commissioner should include under subsection (1) the requirement that the individual “has not been convicted of any offence involving dishonesty”.

The functions of the Commissioner should include the ability to direct the activities and manage the staff of the NCC.

It is suggested that subsection (4)(d) goes too far in permitting the Commissioner to delegate any of her functions to any employee in the NCC. Taken to the extreme this would permit the Commissioner to delegate the power to summons, under s 102 of the Bill.

There appears to be no provision permitting the Commissioner to appoint staff other than inspectors and investigators in s 88. There is no provision for the appointment of alternative dispute resolution officials, for example.

88 Appointment of inspectors and

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investigatorsWho may be appointed, and requirements to conduct function of inspector

It should be a requirement that investigators may not be appointed if they have been convicted of any offence involving dishonesty.

90 FinancesThere is no provision stipulating the financial year of the NCC.

93 Codes of Good PracticeNCC may develop codes of practice on a variety of issues.

There is no requirement for codes to be published or commented on by interested parties, which should be in place if they constitute a form of guideline to the parties.

97 Relations with other regulatory authoritiesBodies with which the NCC may engage.

S 97(1)(c) indicates that the NCC may “participate in the proceedings of any regulatory authority” – this appears to be too broad and should be limited to consumer related issues.

98 Advice and recommendations to the MinisterReporting requirements of the NCC to the Minister.

The NCC should be obliged to report on its operational efficiencies (e.g. number of matters in relation to cost, time taken to resolve disputes, time from referral to conclusion, number of matters outside of its jurisdiction etc) and include analysis of the cost and benefits of the functions of the Commission. Furthermore, this should include an analysis of the relationship between matters dealt with by the NCC as opposed to the provincial authorities or Courts.

99 Enforcement functions of the National Consumer Commission As currently set out, the core role of the NCC is as an

inspectorate with referral functions, with lip service paid to alternative dispute resolution.

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S 99(a) is problematic as it states that it promotes informal resolution of disputes, but is not responsible to do so. The Bill makes no compulsory, or enabling provision for dispute resolution. Contrary to the intention to encourage dispute resolution through mediation, conciliation and arbitration (as set out on pg 201 of the Explanatory Memorandum), there are no provisions or procedures that have any teeth to facilitate this.

It is submitted that the failure of the Bill in this regard will operate most detrimentally in relation to the needs of low income persons and communities, who are the very people who should be most protected by the Act. This undermines the spirit and intention of the Act.

It also undermines the benefits of alternative dispute resolution and social dialogue as a means to efficiently resolving disputes and improving capacity to enforce the provisions of this Act. Surely, alternative dispute resolution should be the core and most important part of the NCC’s mandate if enforcement of consumer rights are paramount.

100 Issuance of compliance noticesRequirements to issue notices of compliance.

A provision giving a supplier an “all clear certification” is also required. Frequently investigations are conducted, and repeated pertaining to the same complaint or from the same complainant. The supplier should be protected from repeated investigations on the same issue if no problem has been detected. In addition, the supplier may not be aware of the outcome of an investigation in the event of a positive conclusion. This can be settled by the requirement to provide the supplier with a compliance report, or something similar, in the event that no compliance concerns are detected.

It is assumed that compliance notices should be properly served on persons, but this is not clearly provided for and should be included in this provision.

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There appears to be no provision permitting a respondent to respond to allegations before a compliance notice is issued. This undermines the administrative justice requirement of audi alteram partem and is problematic.

109 Offences relating to the Commission and TribunalSets out what is an offence.

While it is understood and accepted that any form of obstruction, improper influence or criminal activity in relation to the Act is a criminal offence, it is not clear why failure to comply with an order of the Tribunal (or provincial consumer court) in s 109(1) should constitute a criminal offence, when the order is enforceable as an order of the Tribunal. Despite s 110 that provides that matters may only be criminally prosecuted in the absence of an administrative fine, this provision appears to be unfair, bearing in mind the consequences of a criminal offence and record.

It is unclear how the heading of this section which includes the “Commission” relates to the content of the section.

110. Offences relating to prohibited conduct(a) It is an offence for any person to alter, obscure or remove a displayed price or trade description, without authority.

(2) It is an offence to fail to act in accordance with a compliance notice, but no person may be prosecuted for such an offence in respect of a compliance notice if, as a result of the failure of that person to comply with that notice, the Commission has

To criminalize such conduct is inappropriate (especially where an administrative fine may be issued, which could be 10% of the offending businesses annual turnover or R1 000 000 whichever is the greater). Where a price or trade description is removed (without authority of the supplier or person who applied the trade mark or price), whether innocently or intentionally/negligently, it should be up to the supplier to take action against that person, who is likely in any event to be an employee.

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applied to the Tribunal for the imposition an administrative fine.

112 Administrative FinesDue to the nature and extent of these fines, the composition of the Tribunal must be legally constituted.

S 112(3) should also include reference to the current market practice and to that of other suppliers operating in the same sector or sub-sector, so that this does not operate so as to unduly victimise a certain supplier.

It should be noted that both an administrative fine and damages to the consumer (s115) could be payable by the supplier. Damages, however, would have to be granted through the ordinary Courts (unless consented to by the supplier), and would hence only really be recoverable by those with resources to pursue civil claims.

113. Vicarious liability(1) If an employee or agent of a person is liable in terms of this Act for anything done or omitted in the course of that person’s employment or activities on behalf of their principal, the employer or principal is jointly and severally liable with that person.

In terms of common law, two questions are asked when enquiring whether there is vicarious liability: did the delict occur while the person performing the task was acting on behalf of another (i.e. the “relationship” or question of a link)?

After this is asked, one asks whether the delict was committed during the course and scope of that person’s employment if an employment relationship is involved (i.e. the “activity” question).

It seems that this last question/ matter is omitted from this provision.

It is suggested that the following words “and committed during the course and scope of the employment relationship, or the principal-agent relationship” be inserted after the words “on behalf of their principal”.

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It is submitted that vicarious liability should be limited to only those acts or omissions, which are authorised or directed by the employer. Naturally, the employer must take reasonable steps to train and direct employees in what is required, but where an employee on their own accord acts in a manner contrary to this Act, it would be unfair for the employer to be responsible. Otherwise, the employer could become liable for costly administrative fines, even in circumstances where the employee acts vexatiously against the employer.

119.119(1)(a)

119(2)

Proof of facts(1) In any criminal proceedings in terms of this Act -(a) if it is proved that a false statement, entry or record or false information appears in or on a book, document, plan, drawing or computer storage medium, the person who kept that item may be presumed to have made the statement, entry, record or information, unless the contrary is proved.

A statement, entry or record, or information, in or on any book, document, plan, drawing or computer storage medium is admissible in evidence as an admission of the facts in or on it by the person who appears to have made, entered, recorded or stored it unless it is proved that that person did not make, enter, record or store it.

The Constitutional Court ruled many years ago that presumptions of fact in criminal proceedings are contrary to the Constitution.

To presume that a record is made by a person who kept the record, is extreme and the whole of s 119 should be deleted. The normal rules of evidence should apply to any criminal proceeding.

The same applies to subsection (2).

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120 RegulationsScope of Minister’s regulatory powers and requirements.

There is no provision under s 120(2) for consultation with the suppliers or consumers in a particular sector. This should be included as input in this regard cannot be appropriately captured in the more general consultation for “public comment” requirements.

Item 8Transitional provisions(1) Despite the repeal of the repealed laws, for a period of 3 years after the general effective date the NCC may exercise any power in terms of any such repealed law to investigate any breach of that law that occurred during the period of 3 years immediately before the general effective date.

When a law is repealed, it ceases to exist. The phasing in of legislation is leading to confusion as to what law applies when, which has been seen with the phasing in of the NCA. It will create confusion to now provide for these laws to continue to operate by allowing the NCC to exercise any power in terms of one of the repealed laws.

General comment

Use of the word “person” and other types of “person” defined in the Bill.

The word “person” is used in many sections when the word “supplier” or “consumer” would be more correct.

There are also many other types of “person” in the Bill (e.g.: distributor, importer, intermediary, producer, retailer, service provider and supplier) and it is not clear how they all work together and if they are all actually necessary.

We would welcome the opportunity to engage further and provide information on any of the issues that have been set out in this document, or any other related issues that are relevant to the subject.

In addition, we hereby request the opportunity to present an oral submission.

Yours sincerely

Shani Naidoo49


Chief Executive OfficerRetailers’ Association(sent electronically without signature)

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Annexure 1

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Annexure 2: suggested wording

RETAILERS’ ASSOCIATION: supplementary submission to dti re wording suggestions

19 August 2008Section Requirement Duplication Proposal1 Definition: electronic

communicationThis duplicates the definition in the Electronic Communications and Transactions Act, which regulates all electronic transactions referred to elsewhere in this Bill.

The definition needs to be aligned with the Electronic Communications and Transactions Act. Suggested wording: “means electronic communication as defined in the Electronic Communications and Transactions Act, 2002 (Act No. 25 of 2002)”.

1 Definition: goods This duplicates provisions in the Financial Advisory and Intermediary Services Act as regards the financial services that it regulates as these could be seen as “intangible products written or encoded on any medium”.

State at the end of (b) that “intangible products” excludes anything that is regulated under the Financial Advisory and Intermediary Services Act.

Suggested wording: at the end of (b) after the words: “may be written or encoded”: “excluding any intangible products that are regulated under the Financial Advisory and Intermediary Services Act”.

Also state that if something falls within the definition of a good, that it can then not fall within the definition of a service.

Suggested wording for the latter is as follows: after the word “goods” and before the word “includes” add: “which excludes anything that may be a service,”

1 Add-in definition: “refund”

A definition is required to ensure that suppliers can refund consumers in the

Suggested definition: “Refund” means to refund the consumer the amount paid for the goods as provided in the

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same manner as consumers made the purchase.

relevant provisions, less any penalty amount or deductions allowed or provided for in the Act, and in the same form and manner as paid by the consumer, at the choice of the supplier.”

1 Definition: service This also duplicates intermediary services under the Financial Advisory and Intermediary Services Act as the exemption under (c)(i) only related to “advice” given under the FAIS Act and not to intermediary services, which are also regulated under the FAIS Act.

State in (c) that intermediary services are excluded.

Suggested wording: amend (c)(i) to read: “constitutes advice or an intermediary service that is subject to regulation under the……….”.

Alternatively, (c)(i) could be amended to read: “constitutes a financial services that is subject to regulation under the …….”

As with the definition of goods, it is suggested that anything that is a service cannot also be a good.

It is suggested that after the word “service”, the following is added before the word” includes”: “which excludes anything that may be a good”.

1 Definition: supply The definition, part (a), refers to “sell by installment”. This is covered in the National Credit Act.

The reference to “sell by installment” must be deleted from (a) of the definition.

5 Suggested inclusion of a previous exclusion re credit agreements

Without an explicit exemption of credit agreements covered under the National Credit Act, credit agreements will fall within the ambit of the Bill

In order to ensure that credit agreements are excluded (but making sure that the goods financed are covered by the Bill), an exclusion in s 5 must be included (as per a previous draft of the Bill).

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Suggested inclusion of a previous exclusion re employment contracts

and will have to meets its requirements as per s 2(9).The suggested wording will ensure that the credit agreements fall outside the Bill but the goods/assets financed will remain within the ambit of the Bill.

Without an explicit exemption of employment contracts which are covered under the various labour laws, employment contract/ agreements will fall within the ambit of the Bill and will have to meets its requirements as per s 2(9). The suggested wording will exempt

It is suggested that the words (suitably amended) in the earlier draft be included in the Bill in section 5(2) as a new provision after subsection (c) being: “that constitutes a credit agreement under the National Credit Act but the goods or services that are the subject of the credit agreement are not excluded from the ambit of the Act”.

It is It is suggested that the words (suitably amended) in the earlier draft be included in the Bill in section 5(2) as a new provision after subsection (d) (which is the added subsection above re credit agreements) being: “concerning the services to be supplied under an employment contact”.

20 Consumer’s right to return goods

Provision needs to be made for consumers to provide proof of purchase before returns can be processed by the supplier.


Suggested wording by adding in a new subsection, being subsection (7): “A supplier may require a consumer who returns goods in terms of this section, to provide adequate proof of purchase prior to making a refund to the consumer or taking further required action as per this section.”

Suggested wording by adding in a new subsection, being subsection (8): “Goods returned by a consumer to a supplier, in terms of this section or any other section of the Act are not used goods but are also not to be goods that fall under the Second Hands Goods Act or its successor legislation.”

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32 Direct marketing to consumers at home

To bring the section in line with the heading, it is suggested that wording be added to ensure that the sections do actually apply to direct marketing to consumers at their homes.

It is recommended that the words “to a consumer at his/her place of residence” be inserted after the words “who is direct marketing any goods or services”. The words “at his her place of residence” must be added after the words “and concludes a transaction/agreement with a consumer”.

40 Unconscionable conduct.(1) A person may not use physical force against an individual, coercion, undue influence, pressure, or harassment, unfair tactics or any other similar conduct in connection with any – (d) demand for, or collection of, payment for goods or services by a consumer; or(e) the recovery of goods from a consumer.

The collection of outstanding debts and/or assets that are the subject matter of a credit agreement are regulated by: National Credit Act;

Debt Collectors Act;

Attorneys Act;

Magistrates’ Court Act.

It is suggested that the following words be added at the beginning of section 40(1) being: “Other than as provided for in the National Credit Act and the Debt Collectors Act.”

56 Implied warranty of quality

Provision needs to be made for consumers to provide proof of purchase before returns can be processed by the supplier.

Also, provision needs to be made for the goods returned to not fall within

Suggested wording by adding in a new subsection, being subsection (5): “A supplier may require a consumer who returns goods in terms of this section, to provide adequate proof of purchase prior to making a refund to the consumer or taking further required action as per this section.”

Suggested wording by adding in a new 55


the definition of the Second Hands Goods Act or its successor legislation.

subsection, being subsection (6): “Goods returned by a consumer to a supplier, in terms of this section or any other section of the Act are not used goods but are also not to be goods that fall under the Second Hands Goods Act or its successor legislation.”

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