Busi­ness meth­ods still catch­ing up to the law

Business Day - Business Law and Tax Review - - BUSINESS LAW & TAX REVIEW - Patrick Bracher

Im­por­tant for both sides in a trans­ac­tion to com­ply with the Con­sumer Pro­tec­tion Act

ONE of the un­for­tu­nate con­se­quences of the in­abil­ity of the Na­tional Con­sumer Com­mis­sion to en­force the Con­sumer Pro­tec­tion Act on be­half of the tens of thou­sands of con­sumers who have com­plained has been the fact that the law is largely ig­nored by sup­pli­ers. In the ab­sence of any polic­ing of the act or any proper pub­lic ed­u­ca­tion lit­tle has been done to im­prove meth­ods of do­ing busi­ness.

For in­stance, we all come across dis­claimer no­tices on walls and ex­emp­tion clauses in con­tracts that are now use­less in the face of a con­sumer claim. If there is a dis­claimer notice on your wall or in your agree­ment, it has to be clear that it is a dis­claimer and what its ef­fect is. If you charge for park­ing, “Cars parked at own­ers risk” is no longer go­ing to help you. If you ac­com­mo­date guests they can prob­a­bly draw a line through any dis­claimer you are re­ly­ing on.

Many sales agree­ments still con­tain an “as is” ( voet­stoots ) clause de­spite the fact that the seller of goods can­not so eas­ily con­tract out of li­a­bil­ity for sell­ing de­fec­tive goods. It may be worth leav­ing the clause there for cor­po­rate con­sumers but don’t ex­pect to rely on it for sales to in­di­vid­u­als. For the same rea­son, if you are sell­ing ex­tended war­ranties you bet­ter make sure that they pro­vide pro­tec­tion that is not al­ready given to the con­sumer un­der the act. You may end up as the de­fen­dant in a class ac­tion re­quir­ing you to pay back all the charges you have levied for use­less ex­tended war­ranties.

But never for­get that we are all con­sumers our­selves. If you want to buy a new tablet com­puter, don’t buy it through your com­pany and don’t buy it over­seas. If you buy it per­son­ally in SA you will get all the plen­ti­ful pro­tec­tion that the act of­fers you. As sup­pli­ers you should en­sure that you have a well man­aged and em­pa­thetic goods re­turn pol­icy. On those oc­ca­sions where de­fec­tive goods are sold, the con­sumer must be given a sat­is­fac­tory out­come at the point of sale and not given an ex­cuse to ex­er­cise their con­sid­er­able rights un­der the act. That may re­sult in a com­pli­ance notice and rep­u­ta­tional harm as a sup­plier.

Sup­pli­ers should also pro­tect them­selves where pos­si­ble and make pro­vi­sion for who bears re­spon­si­bil­ity for de­fec­tive goods in the sup­ply chain. The sup­ply chain in­cludes im­porters, man­u­fac­tur­ers, whole­salers and re­tail­ers. They need to agree among them­selves who will bear the loss if de­fec­tive goods are re­turned and have in­dem­ni­ties in place to see that the re­spon­si­bil­ity falls on the right party.

The act should be ap­proached fairly and se­ri­ously. I was told a story about a mo­tor dealer who sold a car to a lawyer on a Fri­day only to find it back on the premises on the Mon­day morn­ing with a note say­ing “I am ex­er­cis­ing my rights un­der the Con­sumer Pro­tec­tion Act” and the pay­ment was stopped. If this sort of thing is done as a means to get free use of a ve­hi­cle by a per­son who has no in­ten­tion of en­ter­ing into the trans­ac­tion, there may be no con­tract at all. The buyer could be li­able for any loss suf­fered by the seller. Don’t fall for un­law­ful use of the act.

Don’t wait for the con­sumer com­mis­sion to get back on track. Do what you have to do now.

Patrick Bracher is a di­rec­tor at Nor­ton Rose SA

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