is that it will have

Harsh Act to fol­low ‘A lin­ger­ing is­sue – as with other new laws –

Finweek English Edition - - PEOPLE -

THE CON­SUMER PRO­TEC­TION ACT (CPA), which was gazetted in April 2009 and will be­come fully op­er­a­tional on 24 Oc­to­ber this year, has far-reach­ing con­se­quences for busi­ness at large. “In my years as an at­tor­ney I don’t think I’ve seen a piece of leg­is­la­tion with more po­ten­tial im­pact on busi­ness than the CPA,” says Dean Chivers, a di­rec­tor at Deloitte in its Le­gal Busi­ness Unit.

Chivers, an at­tor­ney who’s been part of Deloitte Le­gal since its in­cep­tion 12 years ago, says the CPA will fun­da­men­tally change the way busi­ness is done in South Africa. It re­quires busi­nesses to re­con­sider many tra­di­tional busi­ness prac­tices to en­sure all their deal­ings with con­sumers are fair, rea­son­able and hon­est.

The first phase of the CPA, in­tro­duced on 24 April this year, is the harsh sec­tion 61, which holds pro­duc­ers, im­porters, distributers and re­tail­ers – even if they weren’t neg­li­gent – jointly and sev­er­ally li­able for dam­ages caused by un­safe goods, prod­uct fail­ure, de­fects or haz­ards in goods or in­ad­e­quate in­struc­tions or warn­ings. The re­main­der of the CPA will be im­ple­mented on 24 Oc­to­ber this year, when phase two of the CPA takes ef­fect.

Through its pro­mul­ga­tion, the CPA will con­sol­i­date many of the ef­fects of older Acts, such as the Un­fair Busi­ness Prac­tices Act, the Trade Prac­tices Act, the Sales and Ser­vice Mat­ters Act, the Price Con­trol Act and the Mer­chan­dise Marks Act, which ad­dressed the is­sue of con­sumer pro­tec­tion on a more frag­mented ba­sis.

“The CPA is an ex­tremely pro­gres­sive piece of con­sumer pro­tec­tion leg­is­la­tion and busi­nesses will be re­quired to as­sess and amend many of their busi­ness mod­els, strate­gies and ser­vice de­liv­ery meth­ods in or­der to sat­isfy the re­quire­ments for the im­ple­men­ta­tion of the Act,” Chivers says.

The Con­sumer Tri­bunal, Con­sumer Com­mis­sion and courts, to name a few fo­rums, are given com­pre­hen­sive pow­ers to grant or­ders deal­ing with any con­tra­ven­tion of the Act. Should a busi­ness be con­victed for con­tra­ven­ing the Act it may face a hefty fine or even im­pris­on­ment of its man­age­ment. A sup­plier found to have con­tra­vened the Act may face an ad­min­is­tra­tive fine of up to 10% of its turnover or R1m/in­ci­dent, which­ever is the greater.

“It will be in­ter­est­ing to see how far the in­ter­pre­ta­tion of the Act takes the pro­tec­tion,” says Chivers. “The CPA touches on so many dif­fer­ent as­pects of busi­ness there will no doubt be some very in­ter­est­ing con­se­quences. The devil is al­ways in the de­tail. A cou­ple of po­ten­tially in­ter­est­ing ar­eas in­clude how com­pa­nies will bal­ance the new leg­is­lated war­ranties and ex­ist­ing vol­un­tary war­ranties pro­vided by com­pa­nies, how the dif­fer­ent par­ties in the sup­ply chain will man­age their re­la­tion­ships, con­sid­er­ing their new joint and sev­eral li­a­bil­ity obli­ga­tions, and how busi­ness deals with the fact the Act pro­tects not only the buyer of goods but also the ben­e­fi­ciary or user.

“Does that im­ply a shop or petrol sta­tion sell­ing any kind of pre-paid of­fer­ing – such as cell­phone air­time – could be li­able for dam­ages caused by the of­fer­ing sold? And does it im­ply a ho­tel or land­lord could be li­able for dam­ages suf­fered by guests when us­ing elec­tronic ap­pli­ances in the room or premises hired? Drilling down into all the prac­ti­cal busi­ness im­pli­ca­tions of each pro­vi­sion of the Act is the most in­ter­est­ing part of ad­vis­ing com­pa­nies about the CPA.

“I think I’m more of a frus­trated busi­ness­man than a tra­di­tional at­tor­ney, so analysing the real busi­ness is­sues this Act in­tro­duces is very en­joy­able. We at Deloitte

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