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 whose asset value or annual turnover 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 affect 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 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:
- The Sole Proprietor is clearly a consumer in terms of the definition of a consumer in section 1
- A Sole Proprietor is not included in those entities listed under the definition of a juristic person
- 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 proprietor’s turnover or asset value is.
