As many writers have said before, the Consumer Protection Act (CPA) is a far-reaching piece of legislation in that it applies to all transactions where goods and services are provided to consumers. The health and safety industry will be greatly affected, since they supply goods and services to consumers that could get injured or die as a result of the wrong use of their products.
Who is a consumer and how are they protected?
The most far reaching implication of these definitions of the consumer, with regard to the health and safety industry is that the users of specific safety equipment would be designated consumers in terms of the CPA not only the company that buys the product. For example, if a defective safety helmet is supplied to a company that employs an illiterate worker, during the ordinary course of the supplier’s business a supplier can be liable for damage or loss. A supplier can for example be liable, amongst other things, for:
- A product being defective;
- The product being sold contrary to the fact that it is not suited for the intended use by the consumer;
- The directions for the product not being in plain language (keep in mind illustrative directions in the event that the ordinary user may be illiterate); or
- The necessary warnings not being on the product.
What “goods” and “services” will be affected?
With the health and safety industry in mind, the following goods fall within the ambit of the health and safety industry:
- Anything marketed for human consumption;
- Any tangible object (one you can touch) not contemplated above
- Intangible (not physically “touchable”) product including any literature, information and data;
- Any licence to use those intangible products;
- A legal interest in immovable product; and
- Gas, water and electricity.
Services included in the CPA which may fall within the health and safety industry includes, but is not limited to:
- Any work or undertaking performed by a person for the benefit of another;
- Providing of information, advice or consultation, except where FICA applies;
- Transportation of persons or goods;
- Access to electronic communication infrastructure;
- Access or right of access to an event or premises, activity or facility; or
- Access to use a facility in terms of a rental.
- A right to occupy or use immovable property, other through rental; and
- Any rights of a franchisee in terms of a franchise agreement.
The reason why many of these services will fall within the health and safety industry is because the service does not necessarily have to be the main business of the supplier. These apply whether or not a supplier engages directly or indirectly with the service. The grant of access, for example, to a site falls within the act even though it might be secondary to the actual service that is provided.
What transactions fall outside of the Act?
In terms of S5 of the Act the following transactions will however not be subject to the CPA:
- Goods or services supplied to the State
- Where the transaction is a credit agreement as defined in the National Credit Act
- Services under an employment contract
- Transactions which give effect to a collective bargaining agreement within the meaning of S23 of the Constitution and the Labour relations Act.
It is however important to note that provisions regarding monitoring and safety recall (S60) and strict liability for defective goods (S61) apply to ALL transactions, even those listed above. If, for example, safety equipment is supplied to the state, a supplier will still be liable for damage and to have their products recalled even though it is exempt.
The impact of the CPA on the Health and Safety Industry
Basic obligations of suppliers to consumers
The consumer has many new rights in terms of the CPA. All suppliers of goods and services will have to revisit the way in which they treat consumers.
In short, a supplier of goods and services have the following obligations to consumers:
- Give all notices, documents and other visual representations to consumers in plain language (this includes your invoices).
- Provide a written record of all transactions of goods or give them written consumer agreements (there is a list of requirements in S26 of the CPA with regards to what must be on the record).
- Disclose if goods have been reconditioned or imported without the approval or licence of the owner of the trade mark (grey market goods).
- Draw limitation of risk or liability of the supplier to the attention of the consumer.
- Draw potential risks of an unusual character or that the consumer would not usually be expected to be aware of or that could result in serious injury or death to the attention of the consumer.
- Wear or display identification (badge or other identification method) when supplying goods to the consumer if the consumer asks for it.
- Accept the return of certain goods (as indicated in S59) from the consumer, at no cost to the consumer.
- Deliver the goods or refund the consumer for lay-bys.
- Take care and account for a consumer’s property.
Apart from these obligations there are also a couple of focus areas within the CPA that might specifically be relevant with regard to the provision of health and safety goods and services.
The topics listed below, cannot be taken as an all-inclusive list of applicable provisions, but are some of the most important ones to consider in the provision of health and safety services and goods.
Many suppliers may not be aware of this, but those provisions relating to product liability (s61), the establishment of the Consumer Commission (Chapter 5) and the promulgation of regulations (s120) have already come into operation as of April 2010 and are enforceable by consumers. This means that many suppliers are currently contravening the act without even being aware of it.
In general, the CPA protects consumers and provides them with remedies when there is non-compliance with the Act. Key rights (in terms of S61) awarded to consumers are to claim for any harm caused by:
- supplying unsafe goods;
- product failure, defect or hazard in any goods; or
- inadequate instructions or warnings given to a consumer about any hazard relating to the goods.
This section does not stop there. It goes on to say that this damage does not have to be willing, but can be as a result of negligence as well. Not only that, but the consumer only has to prove that the damage was caused partly by these actions or non-actions. This is a scary thought as the supplier has to prove that it did not cause the harm on purpose and also that it did not act negligently. It also has to show that it did not have any connection to the consumer’s damage. The consumer also has the right to sue more than one party if there is a possibility that they are liable.
The type of harm that can be claimed for includes:
- death of, or injury to a natural person (not a company);
- an illness of a natural person;
- loss of or any physical damage to any property (movable or immovable);
- any economic loss which is a result of the above harm.
Suppliers must not only make sure that the goods they supply are safe and in working order, but to make sure that the instructions and warnings are clear. Suppliers can no longer hide behind small print and unclear language to hide the actual risk that they are exposing their clients to. The techniques to employ in drafting these warnings and instructions are similar to what suppliers will have to use in future consumer contracts which are aimed at clarity, simplicity and use by the intended audience.
If suppliers have not yet reviewed the documentation they are circulating to consumers, they might already be facing the possible wrath of the Consumer Commission and possible reputational damage. It must also be kept in mind that consumers also includes users so the illiterate worker will have to be informed by way of illustration or some other method of communication on how to operate dangerous equipment.
Term, renewal and cancellation of contracts
The CPA has radically changed the way in which future fixed term contracts will have to be approached. In terms of S14 there can be no automatic renewal of fixed term contracts and the consumer is entitled to cancel the contract when the term expires. It doesn’t stop there. Consumer may also, at any time during the contract period, cancel the contract by giving the supplier 20 business days’ notice in writing.
Where the consumer cancels the contract before expiry, the supplier can claim all outstanding amounts along with a reasonable cancellation fee. When a fixed term expires, a contract will automatically continue on a month to month basis until renewal or cancellation. A supplier also has to remind a consumer of the expiry date at least 40 business days before the end of the fixed term. Luckily this only applies to natural persons, so all fixed term contracts with juristic consumers will remain unaffected.
Plain language please!
S22 of the CPA a very important provision as it will mean that all suppliers will have to rewrite all correspondence, notices and other consumer documentation so that it complies with the Act’s plain language requirements.
In order to effectively make use of plain language, the document must be written at a level that the target market can read and understand. Ensuring that the document is well structured and clearly laid out will further help the readers navigate their way successfully through the material.
If agreements are drafted in such a way that the consumer is not clearly aware of the obligations and rights of both parties the agreement may be unconscionable and the consumer may be entitled to cancel the contract, or the contract could be set aside by the court. Another novel feature of the Act is that courts are given wide powers to redraft contractual terms where they infringe on consumer rights created by the Act. If a document is not in plain language there can be severe ramifications. Not only can the whole agreement be declared void or a provision severed, but a court can also choose to change the wording of the agreement to what they think is fit. It must also be kept in mind that the CPA also stipulates that a contract must be interpreted in favour of a consumer, so the agreement will more than likely be changed to benefit the consumer
Overselling and overbooking
In S47 the CPA basically requires that a supplier must provide what it promised. When assessing whether or not the supplier acted reasonably the CPA makes provision for a reasonability test. In terms of this test a supplier may not accept payment for goods or services if it has no reasonable intention to supply the goods or services, or where it intends to supply goods or services that are materially different to the goods or services the consumer requested.
If the test fails the supplier has to refund the amount paid to it plus interest, as well as any consequential damages that resulted from the breach of contract.
Consumer’s right to quality of goods and services
In terms of the CPA, consumers have the right to demand quality service (S54) and have the right to safe, good quality goods (S55). There is also an implied warranty of quality (S56) for all goods that are supplied to a consumer. A producer, importer, distributor or retailer each warrant that the goods comply with the requirements and standards of the Act. These persons must ensure that the goods are reasonably suited for the purpose that the consumer has indicated.
If for example a consumer wants to buy gloves for handling hot iron tongs for melting metal and the supplier supplies it with normal safety gloves that cannot withstand the heat, the supplier will be liable. A consumer may return failed, unsafe or defective goods within six month after it was delivered to the consumer. The consumer can then decide if it wants a refund, repair of the goods or a replacement product. Where the supplier repairs the failed or defective goods there is a further three month warranty on the repaired or replaced goods or any component of it.
This is going to change the the current way in which suppliers treat return of good. If a supplier does not educate their staff well, a consumer may get away with returning goods without there being grounds for it, simply by bluffing that the Act applies. On the other side of the coin, a staff member can also get their business into huge trouble if they refuse legitimate returns or if the business implements a “no refund” policy.
Warning concerning fact and nature of risk
This is also an important provision in the CPA, especially with regard to the nature of the health and safety industry. The suppliers of these products might supply products that are potentially dangerous or that pose a risk of death or injury during operation.
In terms of S58 the supplier of any goods or services that involves:
- Risk of an unusual character or nature;
- Risk of which the consumer could not reasonably be expected to be aware of; or
- Risk that could result in serious injury or death.
A supplier must draw the fact, nature and potential effect of that risk to the attention of the consumers in a conspicuous way (S49).
When a supplier packages hazardous or unsafe good it must have a notice on or inside the packaging describing the handling and use of the goods in plain language.
Safety monitoring and recall
In S60 the Act calls for a streamlined approach to safety monitoring. It obliges the National Consumer Commission to promote the development and adoption of industry wide codes of practice in terms of which industries will monitor the safety of their products. This includes the introduction of systems to receive and investigate complaints, recall goods, and reporting on certain matters to the National Consumer Commission.
The National Consumer Commission can, however ask the importer or producer of particular goods to carry out a recall of the product where the Commission has reasonable grounds to believe that goods are unsafe, and no steps have been taken to ensure public safety.
In terms of the latest draft regulations, published in October 2010, there are various requirement for these codes, amongst others that they must plain language and be made available in at least two of the official languages of the Republic.
Where to start with CPA awareness and implementation?
If you are a supplier of goods or services, it is important to take the time to educate yourself on the CPA in order to know your rights and the rights of your customers. It is then important that effort is also put into educating all the employees at your various depots or in various departments. If employees know their client’s rights in terms of the Act you can avoid a situation where a client is “taking a chance” by returning goods, making unfair demands or taking action against you without there being any foundation for it in terms of the Act.
The first step you might consider taking is to try and educate yourself a bit more. You can purchase the Consumer Protection Act Made Easy from us, which is a book that gives you an overview of the whole Act. It is written by Advocate Neville Melville and is R180.00. It is an inexpensive place to start empowering yourself.
We also offer half day and full day workshops to customers where we give you a customised presentation of the impact and implication of the Consumer Protection Act on suppliers. It might be a good idea to get all the managers together to attend one seminar in order to empower them and make them aware of their rights. If you want to have a look at the other services we offer please visit: https://www.michalsons.com/consumer-protection-act-services. If you have a large business you might consider an intensive workshop will the managers of various departments, which also involves the putting in place of a workable action plan for your business.
If you are already educated it might benefit you to have a look at all your consumer documents, as they need to be redrafted into plain language, all unconscionable clauses need to be removed and all terms that may involve placing the risk on consumers need to be brought under the consumer’s attention. We have developed various plain language clauses and assessment methods that will assure your documents comply and your consumers understand what is being said to them.
However, as with many challenges it can also be seen as an opportunity you as a supplier. As suppliers you are required to comply with the law, so why not do so and use the marketing opportunity to tell your customers how much you protect them. The businesses that comply first might well be viewed favourably by consumers.