Sole Proprietors and the CPA

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The Consumer Protection Act  (CPA) is designed to protect consumers from suppliers, who will usually have more power, and be in a better position to enforce their legal rights. However, a ‘consumer’ is not limited to the final person in the supply chain (the man on the street).  A ‘consumer’ is defined broadly in the CPA and could include anyone in the supply chain. However the CPA will not apply to all transactions, most noticeably where the ‘consumer’ is a juristic person who’s asset value or annual turn over is greater than a determined amount (for more information on this amount and how it is calculated see this post) . But what about sole proprietors how will the Act effect them and their suppliers?

The definition of a ‘consumer’ in s1 of the CPA is broad enough to include sole proprietors, (in fact, as mentioned above, it is broad enough to include anyone who uses a service or buys goods).  The definition of “juristic person” (also in s1 of the CPA) lists body corporates, partnerships, associations and a trusts but not sole proprietors.

And according to s5(2) of the CPA, the CPA will apply to all transactions except those where “the consumer is a juristic person whose asset value or annual turnover, at the time of the transaction, equals or exceeds the threshold value determined by the Minister…

So … given all of the above:

  1. The Sole Proprietor is clearly a consumer in terms of the definition of a consumer in section 1
  2. A Sole Proprietor is not included in those entities listed under the definition of a juristic person
  3. The threshold applies to a juristic person whose turnover exceeds the threshold.

It would therefore appear that a Sole Proprietor will have consumer status in dealing with their suppliers no matter what their turnover is ! Suppliers need to be careful now, as they will have to change their suppliers contracts to be in line with the CPA when they are dealing with a sole proprietor, regardless of how big that proprietors turnover or asset value is.

By | 2017-03-30T13:22:27+00:00 November 2nd, 2010|Categories: Consumer Protection|