Consumer Protection Act: implications for suppliers

As of April 1, 2011 suppliers in South Africa must comply with the Consumer Protection Act (CPA). Braam Botha of management training and consulting firm Arbinger Institute of South Africa tells SmartProcurement about some practical and legal implications of compliance.

This article in made available only for information purposes, and is not legal opinion or advice.

Producers, importers, distributors, retailers and suppliers (PIDRS) must comply with the terms of CPA.

PIDRS will attract liability for damages relating to any unsafe goods, product failure, defect (including latent defects), or hazards in any goods, including inadequate instructions or warnings, irrespective of whether the harm resulted from the negligence on the part of the PIDRS or otherwise, says Botha.

“In other words, the entire supply chain could be held liable, jointly or severally.”

Furthermore, all goods supplied by PIDRS will carry an implied warranty of six months in respect of new goods and three months in respect of repaired goods, including quality, he says.

The law relating to late delivery, proper performance under a contract and the transfer of risk of goods will be severely impacted by the act.

It prohibits instances where a supplier is unable to honour his / her commitment towards a consumer: the consumer will then be entitled to a refund of any amount paid to the supplier and consequential damages.

The only defence which a supplier may raise is if it has procured another person to supply comparable goods / services to the consumer which the consumer unreasonably refuses, says Raynique Wright of Trinitas Consulting in a report for the Marketing Association of South Africa.

Meanwhile, the CPA it will have far reaching implications for the marketing, promotion and advertising of any goods or services in South Africa. Marketing strategies will have to be “reinvented” in a sense, says Botha.

“Suppliers will need to familiarise themselves with the Act sooner rather than later and ensure that they comply,” concludes Wright.

The actual fines for non-compliance vary between R1-million and 10% of a company’s annual turnover, whichever is greatest.

SmartProcurement is hosting a half-day legal update on the Consumer Protection Act. Contact events@smartprocurement.co.za to book.