Consumer Protection Act - don't underestimate its effect on purchasing and supply

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Braam Botha.jpg“On April 1, 2011 the scale swung in favour of the consumer…are you ready for that?” Braam Botha, attorney, consultant and former Lecturer at NMMU Business School asked during a recent business seminar.

“From the response of the audience, it was clear that the majority of business people were certainly not ready,” Botha told SmartProcurement.

The Consumer Protection Act (CPA) came into operation on April 1, 2011. One thing is clear: the CPA is here to stay and will have a profound impact on the way of doing business in South Africa. For the first time in the South African history, an act will consolidate the rights of consumers and the obligations of suppliers into one piece of legislation.

The CPA applies to almost all transactions in South Africa, including supply chain and procurement.

In this month’s SmartProcurement, Botha considers the broader application of the CPA on the supply chain and procurement industry. Next month, he will explore the practical implications of the CPA relating to your industry.

“Although the term “procurement” is not specifically mentioned or defined in the CPA, there is no doubt that the objectives, purposes and definitions of the CPA are inclusive of procurement functions: the term “supply chain” is defined as follows:

Supply chain, with respect to any particular goods or services, means the collectivity of all suppliers who directly or indirectly contribute in turn to the ultimate supply of those goods or services to a consumer, whether as a producer, importer, distributor or retailer of goods, or as a service provider.

Therefore, procurement managers are advised to familiarise themselves with the list of terms and conditions that are presumed not to be fair and reasonable. It has recently been adopted in the RCPA Regulations and will have a profound impact on the entire supply chain.

If you are the buyer in the supply chain, it is important to know whether your seller is a supplier, producer, importer, distributor, retailer or service provider in terms of the CPA.

If you are the seller in the supply chain, it is critical to determine whether your buyer is a consumer as defined in terms of the CPA. Your organisation’s status as either buyer, seller, supplier or consumer, is extremely important to determine the legal consequences of almost any transaction in the supply chain.

“Next month I will discuss the status of your organisation which may determine whether it may be held liable for damage caused by unsafe, defective or hazardous goods in terms of the notorious Section 61of the CPA.

At this point, two initial questions are of crucial importance: firstly, whether or not your particular company is a supplier in terms of the CPA and secondly, whether your client could be considered to be a consumer. The answer to these questions will determine the legal relationship and application of the CPA.

It is essential for Financial Directors, Chief Procurement Officers, Legal Officers, Commodity and Sourcing Managers and purchasing and procurement personnel to attend the upcoming short sessions where SmartProcurement, in conjunction with an industry legal expert, will deal in detail - using case studies - with all the elements of this very important Act and Regulations.

SmartProcurement will be hosting a professional update session on the implications of the CPA on August 17 (Centurion) and August 24 (Western Cape), 2011. To register call Erieka Santos immediately on 087 805 0893 or e-mail her on admin@smartprocurement.co.za

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