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Commercial & Corporate Law . 02 Feb 2016
The Consumer Protection Act 68 of 2008(“the CPA/this Act”) came into force on 01 April 2011. This Act has transformed South Africa into a consumers’ paradise.
The immense power wielded by suppliers has been significantly abridged. It is not surprising therefore to hear suppliers in some quarters singing wistful melodies for a return to the status quo ante.
We have witnessed a frenetic race to the Minister of Trade and Industry’s esteemed office by suppliers in some quarters clamouring for industry-wide exemptions and exemption from certain clauses.
We have heard the reproach of “duplication” “expensive” etc. These calls, whatever their origin, founded or unfounded, bear testimony to a simple truth: “The consumer is here!
Gone are the days when a supplier could knowingly sell a consumer defective goods and hide behind the voetstoots clause as a bulwark from which to foist inferior goods on consumers. Suppliers can now happily no longer holler to consumers in respect of contracts: “caveat scriptor”, you signed, it is your fault.
Now the CPA places obligations on suppliers to account to consumers and to treat consumers with the respect they deserve.
The purpose of the CPA can be summarised as follows:
In other words, the CPA levels the playing field between consumers and suppliers. It protects consumers and entrenches a culture of consumer respect.
It has however also been argued in some quarters, cogently it may be added, that the CPA has actually tilted the scales of justice in favour of consumers. Consumers now occupy their rightful place in their relationship with suppliers in a fair and responsible market.
The CPA came into force on 01 April 2011. It applies to all transactions that took place after 01 April 2011.
It applies to the following:
The definition of transaction is particularly important in this regard, which is defined as:
“(a) in respect of a person acting in the ordinary course of business;
(i) an agreement between or among that person and one or more other persons for the supply or potential supply of any goods or services in exchange for consideration
(ii) the supply by that person of any goods to or at the direction of a consumer for consideration
(iii) the performance by, or at the direction of, that person of any services for or at the direction of a consumer for consideration
(b) an interaction contemplated in section 5(6), irrespective of whether it falls within paragraph (a)”.
”Service is defined as:
“(a) any work or undertaking performed by one person for the direct or indirect benefit of another”.
“Goods” is defined as “anything marketed for human consumption”. A consumer is defined as “any person to whom goods or services are marketed or supplied in the ordinary course of a supplier’s business, whilst a supplier is defined as “a person who markets any goods or services”, while marketing is defined “the supply or promotion of any goods or services”.
If these definitional requirements are satisfied, then the CPA applies. When the above definitions are parsed, it becomes immediately apparent that the CPA applies to a wide spectrum of different types of goods and services. The CPA would be applicable in respect of:
Agreements between consumers and suppliers
The provision of goods and services even where there is no agreement between a supplier and a consumer
Services performed for the direct or indirect benefit of another
The CPA therefore has broad application and will affect individuals, companies, sports bodies, teams, trade unions etc.
Section 5(6) provides:
“For greater certainty, the following arrangements must be regarded as a transaction between a supplier and consumer, within the meaning of this Act:
The supply of any goods or services in the ordinary course of business to any of its members by a club, trade union, association, society or other collectivity, whether corporate or unincorporated, of persons voluntarily associated and organised for a common purpose or purposes, whether for fair value consideration or otherwise, irrespective of whether there is a charge or economic contribution demanded or expected in order to become or remain a member of that entity”
In terms of this section therefore, sports clubs, trade unions, burial societies etc would be subject to the provisions of the CPA when providing services to their members.
As an example, a soccer team provides entertainment in the ordinary course of its business i.e. as its core business. Fans pay a consideration for these services by buying soccer tickets. The definitional requirements of a transaction are therefore met and the CPA is therefore applicable.
Consumer’s right to demand quality service
Section 54 provides:
“(1) When a supplier undertakes to perform any services for or on behalf of a consumer, the consumer has a right to the timely performance and completion of those services, and timely notice of any unavoidable delay in the performance of the services; the performance of the services in a manner and quality that persons are generally entitled to expect.”(Own emphasis)
Consumers, in this case members or end users of a service in the form of sports fans, have a right to demand quality performance from their clubs.
Quality is not defined per se but is described as performance in a manner and quality that persons are generally entitled to expect. Anything short of this standard constitutes poor quality.
By way of example, poor quality service may include the following;
A pertinent question is therefore the following: what standards are members or fans entitled to expect from their clubs?
The answer would seem to be that they would be entitled to reasonable performance, which would be judged on the standard of a reasonable member. This would be an objective enquiry, taking into account the club’s past performance and other relevant factors into consideration.
Section 54 provides that if a supplier fails to provide quality service, a consumer may require the supplier to either remedy the defect or pay a reasonable portion of the price paid for the services.
This has implications for all types of consumers including sports bodies, clubs and other service providers such as the South African Broadcasting Service (“SABC”).
All these suppliers owe consumers a duty to render good quality services. The members and fans are entitled to expect good quality services from these suppliers and are entitled to have legal recourse where poor quality service is provided.
Coaches are normally heard to comment after a losing a game” “We did not turn up today’, ‘we left our boots at home’, ‘we slept right through the second half and allowed the opposition to come at us’ etc. This is an admission of poor performance and fans can rely on these statements to demand a refund.
Where a supplier undertakes to perform a service and subsequently fails to do so, this may be regarded as an instance of poor performance. As a case in point, there were numerous reports in the media recently that the game between Bafana Bafana and Egypt would not be televised, after previous undertakings that the match would be televised.
If this had indeed been the case, consumers might have lodged a complaint against the SABC with National Consumer Commission (“the Commission”), the National Consumer Tribunal or the courts to demand that the SABC rectifies the defect or pay a reasonable portion of the price on the basis that poor quality service was rendered.
The right to information
Section 22 provides members with the right to information in plain and understandable language.
All communication by clubs with their members therefore needs to be in plain and understandable language.
This may mean providing information in a particular language, taking into account the linguistic make-up of a particular class of members.
The rights discussed herein are not an exhaustive list of consumer rights. The CPA creates and protects various other consumer rights. Non-compliance with these rights may result in severe penalties for suppliers.
Consumers can exercise their rights through the National Consumer Commission, the Tribunal established in terms of the National Credit Act as well as the courts in the final instance.
Clubs may be liable, depending on the nature of the transgression, to a fine up to R1 million or 10% of their annual gross revenue.
Though the CPA affects many types of goods and services, its impact on sport clubs may not be immediately apparent. However, in their capacity as suppliers, it is in the interest of clubs to invest time and effort to parse the CPA and the Regulations thereto to determine how it affects their business. This may come at a cost but this pales into insignificance when weighed against the cost of non-compliance.