We are learning quickly. As a jurisdiction we have had to play a bit of international catch-up with jurisdictions in other parts of the world that are accustomed to creating consumer rights and consumer protection through the use of legislative instruments. The term "consumer rights" may be defined as follows:
"John F Kennedy’s Consumer Bill of Rights in 1962 is the landmark legislation in this area and defines the four fundamental principles and rights of the consumer:
- The right of consumers to be protected from defective goods and services and unscrupulous or illegal traders.
- The right of consumers to be informed about what they are buying, the price, quality, contents and guarantees for the product or service.
- The consumer’s right to choose and to have a range of competing choices and prices.
- The consumer’s right to be heard by producers and retailers and to have means of address against them if required.
Consumers’ rights are, in the advanced economies, becoming as important as political, social and human rights, and have gained a further stimulus as a result of new trading patterns resulting from globalisation and the internet."1
In South Africa, we have only been confronted with the promotion and protection of consumer rights, in the form of legislation, during the course of 2006. This piece of proposed legislation, which is currently referred to as the Consumer Protection Bill, 2007 2, has recently been published for public comment. This is the second phase of the public participation procedure, the first phase coming to a close during the early half of 2006.
Consumer rights, however, are not altogether foreign to South African law. Certainly, there are a number of pieces of legislation that embody, to a degree, consumer rights and certain pieces of legislation that generally protect consumers.3 There is a fundamental difference in the jurisprudential approach that is taken by those pieces of legislation that advocate consumer rights and those that merely protect consumers. In the first instance, those pieces of legislation that create consumer rights are required to specify expressly the right that is to be protected and the corresponding obligation imposed upon a group of people or persons to uphold or respect the right. In so far as the second type of legislation is concerned, this legislation is created to protect consumers, not by creating rights per se, but by imposing obligations on certain persons or people so as to ensure that, once those obligations are fulfilled, consumers are, in one way or another, protected from unscrupulous or unlawful behaviour.
Where We are Currently
The Consumer Protection Bill presents us with a paradigm shift in relation to the legislative approach traditionally taken by South African law to consumer rights and consumers in general.
The Bill presents South African law with a consolidated text of consumer rights and obligations that are imposed upon certain persons or people for the purposes of ensuring that those rights are upheld, protected, maintained and respected.
Whilst we await the enactment of the Consumer Protection Bill, which is expected during the course of 2007, South African law plods along on the basis of various common law principles that are primarily designed to protect the consumer. In this regard, in a recent judgment by the Supreme Court of Appeal, 4 it was held that –
"The liability of a manufacturing seller as stated by this Court is clear. The addition of qualifications requiring such person to have some degree of skill or expertise would lead to confusion and uncertainty and there is no warrant for it.
The respondent’s counsel submitted that such a conclusion would expose manufacturing sellers to enormous risk. The answer is that they are free to contract out of it. I therefore conclude that if a vendor sells goods of his own manufacture he is liable for consequential loss caused by latent defects in the goods sold even if he is ignorant of the latent defect, irrespective of whether he is skilled in the manufacture of such goods and irrespective of whether he publicly professes skill or expertise in that regard."5
The abovementioned general principle extends liability over a wide base to a great number of people. In order for the court to apply this principle to the facts with which it was concerned, it was required, as the next step, to determine whether or not the respondent in the matter was a "manufacturer" of the goods with which the case was concerned; in this case the aggregate and sand that had been sold by the respondent to the appellant. In order to determine whether or not the respondent was a manufacturer, for the purposes of applying the abovementioned principle, the court engaged in a factual inquiry. 6 The court considered the respondent’s activities and came to the conclusion that the respondent was in fact an expert manufacturer of aggregate and sand albeit that the expert in fact concerned itself with the manufacture of lime products. In this regard, it was held that –
"It does not follow that because a process is designed to manufacture one product, another product which is produced incidentally as part of the process is also not manufactured. It is the result, not the intention of the producer or the primary purpose of the process, which is relevant; and here, as I have said, the result of the respondent’s processes is the production not only of lime but also of sand and aggregate which are different in nature to the original raw material from which they were produced and which have a commercial utility in consequence of the process to which they were subjected." 7
It is a bald and robust principle that a so called manufacturing seller will be held liable for consequential loss that arises out of a latent defect in the goods that he or she sells to a consumer. Certainly, general principles of South African law preclude the ability of a plaintiff to claim consequential loss in certain circumstances, more particularly, where the loss could not have been foreseen by the defendant at the time that the damage occurred or at the time of the sale.8 This is especially so in circumstances where a latent defect exists, which, by virtue of the product that is sold, not even the manufacturer would have been aware of at the time of the sale.
Generally speaking, the principle relating to the liability of a seller for latent defects is that in so far as the seller deliberately misleads a buyer or intentionally hides or fails to disclose the existence of a latent defect to a seller, the buyer will have a claim against the seller in respect of the existence of that defect once the buyer becomes aware of its existence.9
What the abovementioned cases are designed to illustrate is that South African law is not afraid to tackle consumer rights and rights in respect of the sale of goods and the provision of services. In fact, South African law relies exclusively for this purpose on a common law heritage that is derived from both English and Roman Dutch law. There are, it is conceded, a number of statutes that have played a significant role in relation to the creation and protection of consumer rights. However, these statutes are obtuse and esoteric pieces of legislation about which few consumers know or are aware for the purposes of enforcing their rights. This is why the Bill is such a legislative revolution in South Africa.
This is, however, not the only reason why the Bill is the genesis of a revolution: the content of the Bill has caused much concern in and has resulted in heated debate about the rights of both consumers and suppliers in the marketplace on how best to protect the rights of both parties. What complicates the situation is that the Bill is an exceptionally onerous and complex piece of proposed legislation – consisting of some 134 sections and three schedules over 190 printed A4 pages. No one ever said that protecting consumers would be easy or that the legislation should be accessible or simple to read, interpret or enforce. This is, however, one of the Bill’s most crucial failings.
Consumer Protection in terms of the Bill: The Theory
To end this, I should be able to pick up the Consumer Protection Bill, read up what it is that I need to know and enforce my rights accordingly. That is certainly a neat theory. However, the reality is markedly different.
Consumers are a body of people that includes almost everyone in the country. At one point in time every one of us has been in the position or will be in the position of being a consumer: whether we are talking about buying avocado pears or holiday homes, diesel for our motor vehicles or life insurance policies, at one point every one of us is a consumer. Therefore, it would and surely must be of some comfort to all of us that the Consumer Protection Bill exists. This theory is based on the fact that if I have a problem with my service provider or the person who has sold me certain goods, I should be able to access the law and fight justly and rightly for what is mine, enforce my rights and win the day.
In so far as I wish to enforce my rights as a consumer, what the Bill requires me to do is determine, as the first step, whether or not I am a consumer. I am then required to determine whether or not I am entitled to enforce my rights within the four corners of the Bill’s provisions. These inquiries require me to evaluate, bearing in mind that I am a lay person, whether or not my particular circumstances conform with the definitions of "consumer" and "transaction" in section 1 of the Bill.
Without a "transaction" I do not have rights as I am not a consumer. In terms of the definition of "transaction", in section 1 of the Bill, I am required to turn to section 5(5) in which this term is defined. This is a relief as a definition is at least included in the Bill. However, the downside is that the definition consists of primarily legalese packed into six subsections. Now, bearing in mind that I am nevertheless a consumer, I will be required to determine whether or not I have any rights, based on the definition of "transaction", by deciphering the following:
"For all purposes of this Act
- a transaction includes any offer, interaction or agreement to interact, in the ordinary course of business, between two or more persons concerning the supply or potential supply of any goods or services in exchange for consideration; and
- without limiting the generality of subsection (1)
- the supplier 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;
- a solicitation of to enter into a franchise agreement;
- an offer by a potential franchisor to enter into such an agreement with a potential franchisee; and
- a franchise agreement, or an agreement supplementary to a franchise agreement, must each be regarded as being a ‘transaction between a supplier and a consumer’." 10
As a consumer, how can I not be required to obtain the services of a lawyer in order to determine whether or not I have a right to enforce in terms of the law in order to remedy the situation in which I find myself?
The simple fact is that it is possible to enforce your rights as a consumer without the assistance of a lawyer.
If this is so, why would I as a consumer wish to complicate my life? At present, all I am required to do is contact a consumer watchdog association or a loud-mouth consumer journalist at a national, local or regional newspaper, lodge my complaint in terms that make me feel comfortable, and I will receive my justice in that way. However, for the purposes of this argument, we shall assume that retaining a lawyer is not an offensive idea and, as a consumer, I will entertain having to spend quite a bit of money on a lawyer in order to enforce my rights because they are so important to me.
Once I have ascertained from section 5(5) of the Bill that I have, in fact, completed a transaction, the next issue is whether or not I have received goods or services in exchange for the money with which I parted. Once again, however, I am required to decide whether or not these goods or services are contemplated within the four corners of the Bill. I turn again to section 1 and decide whether or not I have received "goods" as defined in section 1.
- " any tangible object, including any medium on which anything is or may be written or encoded;
- any literature, music, photograph, motion picture, game, information, data, software, code, or other intangible product written or encoded on any medium, or a licence to use any such intangible product;
- an interest in land or any other immovable property;
- gas, water and electricity; offered in the ordinary course of business for supply to consumers." 11
The term "service" is similarly defined in section 1 of the Bill as:
- " any work or undertaking performed by one person for the direct or indirect benefit of another;
- the provision of any education, information, advice or consultation;
- any banking services, or related or similar financial services, or the undertaking, underwriting or assumption of any risk by any one person on behalf of another;
- the transportation of an individual or any goods, or any accommodation;
- the provision of any entertainment or similar intangible product;
- the provision of access to any electronic communication infrastructure; or
- the provision of access, or a right of access, to any event, activity or facility;made available or supplied in the ordinary course of business for the direct or indirect benefit of a consumer, and irrespective of whether the person promoting, offering or providing the services participates in, supervises, or engages directly or indirectly in the service." 12
Directly related to my enquiries in respect of whether or not I have bought "goods" or "services" is the notion of whether or not I am in fact "a consumer". This is a little less obvious than one initially thinks. The term "consumer" is defined in section 1 of the Bill to mean:
- a person to whom those goods or services are advertised, offered, supplied, performed or delivered in the ordinary course of business; or
- a user of such goods or a recipient or beneficiary of such services; or
- a person who has entered into an agreement or transaction with a supplier, but does not include a person in the supply chain for those goods or services who, in the ordinary course of business, markets those goods to another person, or applies or utilises those goods or services in the production of other goods or services, or in the marketing of any goods or services." 13
There appears to be, therefore, only a particular group of consumers with which the Bill is now concerned. There are, in light of the definition, a number of people who fall outside of the definition of consumer albeit that they bought may fall within the definition of "transaction". In addition, no one really knows yet what "in the ordinary course of business" means or when one would not be engaged in the "ordinary course of business" so as to fall outside of the exclusion contained in the definition of "consumer".
Once I have been told that I have a cause of action in terms of the Bill because I am a consumer and I did receive goods or services in terms of a transaction, I am then required to decide to whom I should report my problem.
The Bill creates a number of regulatory bodies, all of whom are required to deal with my complaint should it arise in terms of the Bill. As part of this process, I must obviously distinguish between the National Consumer Commission and the Tribunal that deals with complaints in terms of the National Credit Act. 14 Therefore I will have to decide whether or not my complaint is more properly placed before the Commission or the Tribunal.
As a consumer, I am not altogether sure that I will in a position to make that decision, considering that I will be required to have knowledge of both the provisions of the National Credit Act and the Bill in order to decide who should properly deal with my complaint. In this regard, I would not be entitled to approach a court for any relief as I am required to exhaust, in terms of the principles of South African administrative law,15 my internal remedies prior to approaching a court for relief. All in all, I think the point is made that the complexities inherent in the Bill preclude, almost entirely, the lay person from enforcing his or her rights, as a consumer, in the absence of legal assistance.
The focus of the Bill
Another point that I have already made is that the Bill is riddled with terms that are defined in section 1. It is therefore difficult to provide a meaningful assessment of general principles without ploughing through a myriad of terms that have been specifically defined for the purposes of enforcing the provisions of the Bill. I have therefore elected to focus the attention of this paper rather on the provisions of Part B of Chapter 1 of the Bill.
Part B is described in the index to the Bill as the "purpose, policy and application of the Act". Part B contains important aspects of the Bill as it should, once it has been unpacked and analysed, bearing in mind that it consists of approximately four sections, it will clarify the scope and ambit of the Bill once it becomes an Act and the impact that it will have on existing South Africa law.
Section 3 deals with the purpose and policy of the Bill. This is an important section as it sets the context within which the remaining provisions of the Bill will be interpreted by both the Commission and a court when confronted with enforcing the provisions of the Bill.
Section 3, therefore, begins with a grandiose and aspirational restatement of the promotion and advancement of social and economic welfare of "consumers in South Africa". This "advancement" and "promotion" are to be achieved by applying the provisions of subsections (a) to (i). These subsections deal with the philosophy underscoring the existence of the Bill. This legal philosophy is, in turn, constructed on the basis of a legal framework "for the achievement and maintenance of a consumer market that is fair, accessible, efficient, sustainable and responsible for the benefit of consumers generally." The presumption underscoring subsection (1)(a) is that the existing legal framework, which currently supports the marketplace, is unfair, inaccessible, inefficient, unsustainable and irresponsible in relation to the consumers that it is supposed to serve. Consequently, it must be accepted that what it is that the Bill intends to establish and promote a legal framework that must revolutionise the existing legal framework so as to allow the Bill to meet its aspirations.
Herein lies the rub: to revolutionise an entire marketplace requires a readjustment of expectations and the realignment of rights and obligations of its participants, which are already set out in existing contractual documentation. One would also need to reorganise the common law so as to align its principles with those contained in the Bill. Therefore, the certainty that pervades the marketplace, in respect of the manner in which consumers and suppliers currently do business, begins to evaporate. In the resulting vacuum, the consequent panic is all that is left and the Bill does little to address this state of affairs other than to provide for a couple of transitional provisions in Schedule 3.16
The Bill is also designed to reduce and ameliorate the disadvantages experienced in accessing any supply of goods or services by consumers who fall into various categories. These categories are:
- black people; 17
- low-income persons and those persons comprising low income communities;
- persons who live in remote, isolated or low density population areas or communities;
- minors, seniors and other similarly vulnerable consumers; and
- people whose "ability to read and comprehend any advertisement, agreement, mark, instruction, label, warning, notice or other visual representation is limited by reason of low literacy, vision impairment, or limited fluency in the language in which the representation is produced, published or presented."
Certainly, the first couple of categories are relatively easy to comprehend and interpret. These categories are, however, confined in their scope and ambit, to a degree, by definitions contained in section 1 of the Bill but, by and large, the categories are self evident from the language that is used in the subsections. This is so with the exception of "low income" as it is not clear what constitutes "low income" when measured against the other factors in the subsection.
The most interesting category is that in subsection (1)(v) which deals with illiteracy. Who would fall into this category? Well, based on the ordinary grammatical meaning of the words used in this section, it would be those who are illiterate, blind or are presented with information in a language that they do not understand or in which they are not fluent. The difficulty is that marks, labels or warnings sometimes do not appear in a written language. They appear as symbols. Have you ever attempted to decipher the meaning of these symbols:
X which appears on clothing labels; or
2 □ which appears on the packaging of medicine.
In so far as one is of good standing in one’s community, literate, able visioned (albeit with the aid of spectacles) and enjoys a limited degree of fluency in two or three languages, these marks and symbols still confound one. Does one, therefore, fall within the scope and ambit of subsection (1)(v) and entitled to benefit from those provisions of the Bill that are specifically addressed to the object of reducing and ameliorating disadvantages for this particular class of persons?
In so far as subsection (c) is concerned, the Bill is designed to promote fair business practices. Subsection (c) deals with "promoting fair business practices". 18 However, the term "fair business practice" remains undefined in section 1 of the Bill. This is an interesting provision in so far as there are a number of "business practices" that are defined in section 1 of the Bill. These business practices include advertising, alternative dispute resolution agent, "business",19 continuous service, "direct marketing",20 electronic communication, facility, lease, importer, licence, loyalty program, market, "offer to supply", 21 personal marketing, prescribed, price, prohibited conduct, promote, public regulation, retailer, service provider, SMS, "small business", 22 special order goods, supply, supply chain, telephonic communication, trade description, used goods, utility and visual representation. All of these terms, when one considers their respective definitions, apply, in one way or another, to a business activity. One is required to interpret the Bill in accordance with the ordinary rules of statutory interpretation. However, one is then able to exclude all of those practices that are not expressly mentioned in the Bill. Obviously, the drafters of the Bill intended for it to apply to very specific circumstances and business practices, which is why these particular terms have been defined in section 1. No doubt, this aspect will have to be clarified by our courts or the Commission, as the case may be.
Returning to a point that was made at the outset of this paper, that consumer legislation falls into two categories: legislation that is designed to create consumer rights and legislation that is designed to protect consumer. Subsection (d) expressly directs itself to the protecting of consumers from:
- "unfair, unreasonable or otherwise improper trade practices; and
- deceptive, misleading, unfair or fraudulent conduct." 23
It is not altogether clear from the provisions of the Bill what the difference is between "fair business practices" and "trade practices". There must be a distinction between "trade" and "business". In fact, this distinction is recognised by our courts in so far as they have grappled with the interpretation of section 22 of the Constitution. 24 It is presumed that a similar distinction will have to be made for the purposes of interpreting these subsections. If so, the Bill will be a hybrid of legislation that protects consumers from certain behaviour and legislation that creates consumer rights. This may be the only basis upon which it is possible to distinguish between subsections (c) and (d) for the purposes of interpreting the Bill.
Subsections (e) to (i)25 adopt more philosophical and jurisprudential approaches to the ideologies that underlie the Bill. Therefore, the Bill is designed to –
- promote social, economic and environmental responsibility in consumer market;
- promote consumer confidence and empowerment;
- develop a culture of consumer responsibility through individual and group education, vigilance, advocacy and activism;
- improve consumer awareness and information;
- encourage responsible and informed consumer choice and behaviour;
- provide for consistent, accessible and efficient systems of consensual resolution of disputes and systems of redress by consumers.
In so far as subsections (h) and (i) are concerned,26 the National Consumer Commission has been created. Its goals and responsibilities are set out in section 3(2). 27 In addition to the Commission’s administrative functions, for the purposes of hearing complaints by consumers, it also carries certain additional responsibilities. These responsibilities are set out in subsections (2)(a) and (b). Included within these responsibilities is the requirement that the Commission must take reasonable and practicable measures to promote the objects of the Bill. It is presumed that this responsibility is required in terms of initiatives that must be sponsored by the Commission other than by carrying out its functions and exercising its powers in terms of the Bill. Therefore, as a creature of statute, the Commission has a broad range of powers and certainly, in so far as one interprets the goals and objects of the Bill broadly, the powers and functions of the Commission are extensive.
Consumer rights in broad principle
The core of the Bill is the identification of and enforcement of consumer rights.
There are a great number of sections dedicated to the identification of consumer rights in the Bill. However, in order to expand upon the system, created by the Bill relating to consumer rights, a number of sections in Part B deal with practical issues relating to who can institute proceedings before the Commission or a court for the purposes of protecting consumer rights.
Consumer rights have always been characterised by a culture of advocacy: one person fighting for the rights of many against large corporations and multinationals in order to champion the consumer who finds the cockroach in the jar of cream or the glass in his or her can of cold drink. This principle or ideology is recognised in section 4 of the Bill. Section 4 also aligns the Bill with the provisions of section 38 of the Constitution. 28 The Constitution recognises that various different people or persons may wish to bring legal action on behalf of other people or persons in order to enforce rights. Section 4, therefore, creates five categories of persons who may institute proceedings before the Commission or a court in order to enforce rights created by the Bill.
In addition to the provisions of section 4(1), section 4(2) of the Bill sets out a directive that a court must take into account when dealing with the enforcement of any aspect of the Bill in a matter before it. 29 These are specific directions to a court, which it must follow for the purposes of dealing with any complaint placed before it by a consumer. Section 4(2) is express in so far as it refers to a court or "the Tribunal" but it does not refer to the Commission. The reason for this omission is not clear. The provisions of this section are peremptory in so far as it obliges a court or the Tribunal to take into account the considerations that are set out in the subsections concerned. Therefore, when interpreting the Bill, bearing in mind what is set out above in relation to its unwieldy definitions section and its sheer size and complexity, courts must develop the common law so as to "improve the realisation and enjoyment of consumer rights generally, and in particular by persons contemplated in sections 3(1)(b)."
Our courts are not courts of equity, they are courts of principle and precedent. It is well recognised in South African law that our courts are not able to provide relief to a plaintiff based on principles of equity such as those that are contemplated in section 4(2)(a). 30 In fact, section 4(2)(a) is in direct conflict with well established principles of South African law. In so far as the Tribunal, which is not a court of law, is seized with a particular consumer complaint, it is at liberty to apply equitable principles. However, this is not the case with a court. There is also no reason why this should be the case. Our courts are more than competent and adequately equipped to deal with complaints placed before them by plaintiffs or appellants, as the case may be, without having to engage in debates about equity, improving consumer rights and realising those rights in circumstances where the law arguably already provides adequate protection.
In any event, in so far as there is a conflict between the Bill and any other piece of consumer type legislation, then it is the latter legislation that is to prevail over the Bill. In so far as a precedent already exists in respect of the interpretation of that legislation or the court is required to deal with that legislation, rather than the Bill, there is no reason why a court would apply the provisions of section 4(2)(a) in that dispute. Therefore, there is a distinction that a court would have to bear in mind when dealing with any other piece of consumer legislation and when dealing with the provisions of the Bill. There is no reason to create such a hierarchy in the legislation or impose such an unnecessary, complex system of interpreting legislation. This is especially so in circumstances where the law otherwise, quite admirably, is able to deal with the situation in the absence of the directives contained in section 4(2)(a). Similar criticisms may be levelled against the contents of section 4(2)(b), especially the provisions of subsection (bb), which requires a court or tribunal to be "innovative" in making orders "that better" advance, protect and promote and assure the realisation by consumers of their rights in terms of this Act.
When one considers the provisions of sections 4(3) and 4(4), one discovers that there is very little room for a tribunal or court to manoeuvre for the purposes of interpreting the Bill or its provisions. This is especially so in relation to interpreting contracts.
Our courts have taken great care to develop a system of principles that deal with the interpretation of contracts and statutes, bearing in mind that ambiguous terms in contracts have been around since contracts were discovered as being the preferable form of doing business in western society.
In terms of section 4(4), 31 in so far as a contract does form the basis of a dispute between two parties before a tribunal or a court, the contract must be strictly interpreted in favour of the consumer. Therefore, clauses contained previously in contracts that embody the so called contra proferentem rule or the rule that ousts the ability of the interpreter of the contract to interpret the terms of the contract against the party that drafted it, will no longer be of any effect in light of subsection (4). The consumer is placed in a better position but only in so far as a dispute arises and a contract must be interpreted.
Subsection (4)(b) takes the matter of interpretation a little further by requiring a court or tribunal to identify restrictions, limitations, exclusions or deprivations contained in a contract, which apply to a consumer’s legal rights, and to limit those clauses so as to align the document with the expectations of a reasonable person "having regard to the content of a document, the manner in form in which it was prepared and presented, and the circumstances of the transaction or agreement". Therefore, consumers who sign agreements will be favoured in so far as those agreements contain restrictive covenants –
- to which that consumer would not have agreed;
- in circumstances where a dispute arises;
- the consumer is able to produce evidence that it would not have been expected of him or her to have realised or agreed to such a term in the circumstances.
Section 4(5) of the Bill contains the general principles upon which the legal aspects of the Bill are based. It is a strange place to find such general principles. However, one must be aware that these principles exist in section 4(5) as there are other more specific principles that are contained in the balance of the provisions of the Bill to which one must pay attention for the purposes of determining one’s rights and obligations. Section 4(5) imposes a general prohibition on everyone who deals with consumers or potential consumers "in the ordinary course of business".
These prohibitions are that –
- no one may engage in activities that are calculated to frustrate or defeat the purposes and policies of the Bill;
- no one may engage in conduct that is unconscionable, misleading or deceptive or that is reasonably likely to mislead or deceive. This is a general principle and is broadly stated. It is not clear to what this broad principle applies. However, in so far as one is able to interpret it and apply it only to the provisions of the Bill, then one must presume that it is the codification of the South African common law in respect of the misrepresentations that at times surround contractual conduct between two parties;
- person may not make representations about a supplier or any goods or services, or a related matter, unless the person has reasonable grounds for believing that the representation is true. This is an interesting sub clause in so far as, provided one has reasonable grounds for believing that a particular proposition is true, then one is able to make representations about it. Whether or not these beliefs are supported by scientific and empirical investigation is entirely beside the point. This is a relief for the manufacturers of complementary and traditional medicines, for example as, provided there is a somatic aspect or element of the administration of a particular medication or treatment regime, whether or not it does in fact cause the treatment of a particular physical or mental condition in a human being is besides the point, as the representations about that particular complementary or traditional medicine may be made and supported in the marketplace notwithstanding the provisions of the prohibitions to which I have already referred.
Section 5 provides that the Bill will apply to almost every transaction that occurs on a daily basis in the country as between a consumer and a supplier. There are, however, exemptions to this general rule and these are set out in section 5(2). 32
These exemptions apply to services supplied in terms of an employment contract, between the State and a juristic person "and the value of the transaction [that] exceeds the threshold value determined by the Minister in terms of section 6." The Bill generally applies to every transaction occurring in the Republic, every advertisement transmitted or published in the ordinary course of business to a perspective consumer, and any goods or services that are reasonably the subject of the transaction to which the Bill will apply, subject to subsection (4) "and irrespective whether any of those goods or services are offered or supplied in conjunction with other goods or services, or separate from any other goods or services." There is therefore a distinction drawn in the Bill between the transactions to which subsection 1(a) refers and the goods and services referred to in subsection (c). There are goods and services that do not fall within the scope and ambit of the Bill and to which the Bill will accordingly not apply. Therefore, one must be careful not to interpret the Bill too broadly in light of the exemptions in Part B. In so far as subsection (4) is concerned, the Bill will apply to goods supplied within the Republic irrespective of whether or not the transaction is subject to South African law.
In so far as the threshold determinations contemplated in section 6 are concerned, the Minister is entitled to determine a monetary threshold applicable to the value of transactions for the purposes of section 5(2)(b)(ii). These thresholds are to be determined at intervals of not more than five years and an initial threshold is to be determined by the Minister on the effective date of the Bill. However, the provisions of subsection (2) apply only to transactions and not to advertisements or goods and services that are supplied in terms of transactions that are not subject to thresholds. This conclusion is supported by the language of the Bill in so far as subsection (2) does not refer to "advertisement" or the goods and services otherwise referred to in subsections (1)(b) and (c) of section 5.
If there is a conflict between the Bill and the provisions of any other legislation that already apply to a transaction, advertisement, goods or services, then the general principle is that the transaction, advertisements or goods and services may be dealt with in terms of the other piece of legislation or in accordance with sub item (1) of Schedule 1 to the Bill. By way of example, medicines are regulated expressly by the Medicines and Related Substances Act No. 101 of 1965, as amended ("the Medicines Act"), and liability exists within that Medicines Act in so far as medicines are marketed or sold in contravention of guidelines published by the Medicines Control Council or the provisions of the Act.33 Therefore, in so far as one wishes to take action against the supplier of a medicine concerned, one would do so in terms of the provisions of the Medicines Act and not the Bill, but only insofar as one is able to establish that the Medicines Act provides a remedy that is not otherwise provided in the Bill and that the Medicines Act falls outside of the provisions of item 1 of Schedule 1 to the Bill. This requires that one must show that –
- there is an inconsistency between the provisions of the Bill and the Medicines Act;
- compliance with a provision of either the Bill or the Medicines Act would constitute a contravention of either the Bill or the Medicines Act; and
- the provisions of the Medicines Act extend greater protection or benefit to the consumer than when compared to the provisions on which reliance is being placed in the Bill
In circumstances where one is dealing with older, unamended pieces of legislation that do not otherwise impose fines that are greater than those imposed by the Bill or contain penalties that are not updated, when compared to the modernities of the Bill, then the Bill will always apply.
In terms of section 5(7),34 the Bill applies to all suppliers that are identified in subsection (7)(a) to (d). These suppliers are identified as those residing or having their principal offices within or outside of the Republic, non profit organisations, individuals, juristic persons, partnerships, trusts, organs of State, entities owned or directed by organs of State, persons contracted or licensed by organs of State to offer or supply any goods or services, a public or private partnership or a person who is licensed in terms of any public regulation to make the supplier of particular goods and services available to all or part of the public.
Subsection (7)(c) refers to "organs of State". However, subsection (5)(2)(b)(i) exempts organs of State from the application of the Act. There is therefore an inherent conflict between these two subsections, which would have to be resolved ultimately by the Commission or a court.
There is certainly panic amongst the legal fraternity in respect of the revolution the Bill is expected to cause, however, this is primarily born of the principles of equity that the Bill intends to introduce into South African law.
The problem, however, is that in so far as consumer rights are concerned, there already appears to be a great deal of equity in South African law and that is already encoded in our common law and our precedent.
Returning to the Supreme Court of Appeal decision, referred to above, the court held that it was unreasonable for anyone to have been expected to have consented to the respondent’s general terms and conditions. The court found that for the terms and conditions to be applicable, actual knowledge of the conditions is required. In examining the facts of the manner in which the parties conducted their contractual affairs, the court found that the respondent’s terms and conditions did not form part of the contract. This conclusion was reached by the court examining the facts of the parties’ relationship. This examination took into account the bargaining power of each party and the facts that otherwise find a place in the provisions now contained in the Bill. It would appear, if one reads the aforementioned decision carefully, that there is certainly an argument to be made that the Bill, once it is introduced as an Act, may not be such a shock to the legal system as I am advocating. Our courts have taken a liberal view of contracts that deal with the issues with which the Bill is concerned – preferring consumer rights over contractual covenants upon which disputing parties always turn when trouble presents itself.
Perhaps, therefore, the Bill is not that much different to the principles with which we are already dealing, on a day to day basis, within the ordinary course of business. The difficulty is that the Bill will now be subject to judicial scrutiny and the principles of interpretation that are applied to statutes. This subjects the Bill to a legalistic and formalistic approach to determine the scope and ambit of its provisions, which may, in the end, have the opposite effect to the promotion and establishment of equitable principles of the nature envisioned by the Bill.
The future of the Bill will be determined largely by the effect that it has on consumer rights and whether or not it will indeed fulfil the objectives contained in Part B.
If the Bill merely introduces a complex and unwieldy administrative structure for the purposes of enforcing consumer rights, then the Bill will fail. Based on the degree of administrative and bureaucratic red tape that the Bill introduces, it is unfortunate that otherwise laudable principles have been established and created subject to this degree of bureaucratic enterprise. It is doubtful whether the Bill will achieve its objectives based purely on this bureaucracy.
It is, however, of great comfort to know that when one buys an avocado pear or a motor vehicle, one has the Bill on one’s side as a consumer. It is even of a greater comfort to know that as a lawyer, the Bill has been created as it bodes well for the profession – the role of lawyers in consumer disputes will be indispensable. However and ironically, lawyer’s services will be subject to the same provisions about which he or she will probably be fighting on behalf of his or her consumer client.
The Bill heralds the rise of consumer rights in South African law as formal legislative rights and the demise of the contractual power struggles that have otherwise characterised the historic and conventional debates between consumer and supplier and upon which South African contract law is based. Therefore, the arrival of the Bill will undoubtedly revolutionise the way in which business is done in South Africa. Consequently, the Bill will change the way in which South African contract law operates and the way it will define itself into the future.
Whether or not the existing principles of contract law will survive the application of the Bill, is yet to be seen. However, based on the directions to tribunals and courts, contained in Part B, it may be that we will see a significant departure from the certainty of the contractual principles that we hold dear and to which we have all subscribed in relation to the bartering of goods and services in our marketplace.
1 See Doyle Collins Internet Linked Dictionary of Marketing (2005) at
2 The second draft of the Bill is entitled "Draft for submission to be enacted" and is dated 8 September 2006.
3 Examples of such legislation include the Consumer Affairs (Unfair Business Practices) Act No. 71 of 1988, the Trade Practices Act No. 76 of 1976, the Sales and Services Matters Act No. 25 of 1964, the Business Names Act No. 27 of 1960, the Businesses Act No. 71 of 1991, the Price Control Act No. 25 of 1964, sections 2 to 13 and sections 16 to 17 of the Merchandise Marks Act No. 17 of 1941, the Medicines and Related Substances Act No. 101 of 1965, as amended and the Medical Schemes
Act No. 131 of 1998, as amended.
4 D & H Piping Systems (Proprietary) Limited v Trans Hex Group Limited and Another  3 All SA 309 (SCA)
5 See paragraphs 31 and 31 of the D & H Piping Systems decision, quoted above.
6 See paragraphs 32 to 36 of the D & H Piping Systems decision, quoted above.
7 See paragraph 36 of the D & H Piping Systems decision, quoted above.
8 See the D & H Piping Systems decision, quoted above, D Hutchinson "Back to Basics: reliance damages for breach of contracted revisited"
South African Law Journal 121(1) (2004) at 51, D J Lotz "Aanspreklikheid
vir verborge gebreke in die Engelse en Kanadese reg" De Jure Vol. 34
Issue No. 3 (2001) at 515.
9 Van der Merwe v Meads 1991 2 SA 1 (A) and A J Kerr The Law of Sale and
Lease 3rd ed (2004) at page 137
10 The definition of transaction, which appeared in the previous draft of the Bill, provided that the term "transaction" means "any interaction, agreement to interact, in the ordinary course of business, between a supplier and a consumer concerning the supply or potential supply of any goods or services in exchange for consideration, including any such supply or potential supply of goods or services in exchange
for consideration in terms of any public regulation." The current definition, which appears in section 1 of the term "transaction" states that the term means: "the meaning set out in section 5(5)".
11 The term "goods" as it was defined in the previous draft of the Bill provided that the term means: "includes –
(a) any tangible object offered in the ordinary course of business for sale, lease, or supply to consumer;
(b) any medium on which information is or may be written or encoded, and anything written or encoded on any such medium;
(c) an interest in land or any other immovable property; and
(d) gas, water and electricity".
12 The term "service" was defined in the previous draft of the Bill
"(a) any activity of any kind promoted, offered, made available or supplied in the ordinary course of business for the benefit of a consumer;
(b) access, or a right of access promoted, offered or made available in the ordinary course of business to
(i) an event or activity;
(ii) any premises in which an event is to occur or activity may be engaged in; or
(iii) any equipment in or on which an activity may occur, to irrespective
whether the person promoting, offering or providing that access participates in, supervises, or engages directly or indirectly in the event or activity".
13 The term "consumer" is defined in the previous draft of the Bill
"depending on the context, means
(a) a person to whom goods or services are advertised, offered, supplied, leased, sold or delivered in the course of business;
(b) a user of such goods or a recipient or beneficiary of such services;
(c) a person who has entered into an agreement or a transaction with
14 Act No. 34 of 2005
15 See the provisions of the Promotion of Access to Information Act No. 2
16 In terms of Item 3 of Schedule 3 to the Bill, the following is provided:
"(1) This Act applies to an agreement that was made before the effective
date, if that agreement contemplated that the parties to it
would be bound until a date that is on or after the second
anniversary of the effective date, subject to Item (2).
(2) The application of this Act to a pre existing agreement applies
(a) any prepayment for services, deposit or right to refund under
(b) any property of the consumer held by the supplier on or after
the effective date; and
(c) any action, forbearance, obligation or right contemplated in
that agreement and to be performed or enjoyed on or after the
(3) Sections 65 to 68 of this Act apply equally in respect of goods that
were first supplied to a consumer
(a) during a prescribed period before the effective date; or
(b) on or after the effective date."
17 The term "black people" is defined in section 1 of the Bill to mean "the meaning set out in the Broad Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003)".
18 Section 3(1)(c) provides that:
"The purpose of this Act is to promote and advance the social and
economic welfare of consumers in South Africa by
(c) promoting fair business practices …"
19 The term is defined as "the continuous offer to supply, and the continual
supply, of any goods or services to consumers for consideration".
The term "consideration" is also defined in section 1 to mean "anything of value given an accepted in exchange for goods or services, including
(a) money, property, a cheque or other negotiable instrument, a token, a ticket, electronic credit, credit, debit or electronic chip, or similar object;
(b) labour, barter or other goods or services;
(c) loyalty credit or award, coupon, or other right to assert a claim; or
(d) any other thing, undertaking, promise, agreement or assurance, irrespective of its apparent or intrinsic value, or whether it is transferred directly or indirectly, or involves only the supply and consumer, or other parties in addition to the consumer
20 The term "direct marketing" is defined to mean "to approach a person at home or at the person’s place of business, in person or by telephonic communication, for the direct or indirect purpose of
(a) promoting or offering to supply, in the ordinary course of business, any goods or services to the person; or
(b) requesting the person to make a donation of any kind for any reason".
21 The term "offer to supply" is defined to mean: "includes
(a) the display of any goods for the purpose of promoting their supply; and
(b) any advertisement, notice, communication or representation that could reasonably be inferred as expressing a willingness to supply any goods or services for the benefit or at the direction of a consumer".
22 The term "small business" defined in section 1 to mean "the meaning set out in the National Small Business Act, 1996 (Act No. 102 of 1996)".
23 This section is repeated verbatim from section 3(1)(c) of the previous draft of the Bill.
24 Section 22 of the Constitution provides that:
"Every citizen has the right to choose their trade, occupation or profession freely. The practice of a trade, occupation or profession may be regulated by law."
25 Sections 3(1)(e) to (i) provide as follows:
"(e) promoting social, economic and environmental responsibility in consumer markets;
(f) improving consumer awareness and information and encouraging responsible and informed consumer choice and behaviour;
(g) promoting consumer confidence and empowerment, and the development of a culture of consumer responsibility through individual and group education, vigilance, advocacy and activism;
(h) providing for a consistent, accessible and efficient system of consensual resolution of disputes arising from consumer transactions; and
(i) providing for an accessible, consistent, harmonised, effective and efficient system of redress for consumers."
27 Section 3(2) provides as follows:
"To better ensure the realisation of the purposes of the Act, and the
enjoyment of the consumer rights recognised or conferred by this Act,
the National Consumer Commission, in addition to its responsibilities
set out elsewhere in this Act, is responsible to
(a) take reasonable and practical measures to promote the
purposes of this Act and to protect and advance the interests of
all consumers, and in particular those consumers contemplated in
(b) monitor and report each year to the Minister on the following
(i) the availability of goods and services to persons contemplated
in subsection 1(b), including price and market conditions, conduct and trends affecting the consumer rights;
(ii) access to the supply of goods and services by small businesses or persons contemplated in subsection (1)(b); and
(iii) any other matter relating to the supply of goods and services;
(c) conduct research and propose policies to the Minister in relation to any matter affecting the supply of goods and services, including but not limited to proposals for legislative, regulatory or policy initiatives that would improve the realisation and full enjoyment of their consumer rights by persons contemplated in subsection (1)(b)."
28 "Anyone listed in this section has the right to approach a competent Court, alleging that a right in the Bill of Rights has been infringed or threatened, and the Court may grant appropriate relief, including a declaration of rights. The persons who may approach a Court are
(a) anyone acting in their own interest;
(b) anyone acting on behalf of another person who cannot act in their own name;
(c) anyone acting as a member of or in the interests of a group or class of persons;
(d) anyone acting in the public interest; and
(e) an association acting in the interest of its members."
29 Section 4(4) provides that "a Court or Tribunal must strictly interpret any standard form contract or other document prepared or published by or on behalf of a supplier or required to be produced by a supplier, to the benefit of the consumer
(a) so that any ambiguity that allows for more than one reasonable interpretation of a part of such document is resolved to the benefit of the consumer; and
(b) so that any restriction, limitation, exclusion or depravation of a consumer’s legal rights set out in such document or notice is limited to the extent that a reasonable person would ordinarily contemplate or expect, having regard to the contents of the
document, the manner and form in which it was prepared and presented, and the circumstances of the transaction or agreement."
30 Section 4(2) provides that:
"In any matter brought before the Tribunal or a Court in terms of this Act
(a) the Court must develop the common law as necessary to improve the realisation and enjoyment of consumer rights generally, and in particular by persons contemplated in section 3(1)(b); and
(b) the Court or Tribunal, as the case may be must:
(i) promote the spirit, purpose and objects of this Act;
(ii) make appropriate orders to give practical effect to the consumers’ rights of access to redress, including, but not limited to
(aa) any order expressly provided for in this Act; and
(bb) any innovative or at that better advances, protects, promotes and assures the realisation by consumers of their rights in terms of this Act."
31 See section 4(4), which is quoted above.
32 Section 5(2) provides as follows:
"This Act does not apply to any transaction
(a) pertaining to services to be supplied under an employment
(b) if the consumer is
(i) the State, or an organ of State; or
(ii) a juristic person, and the value of the transaction exceeds the threshold value determined by the Minister in terms of section 6".
33 See section 19 of the Medicines Act.
34 Section 5(7) provides that:
"The application of this Act in terms of subsections 1 to 6 extends to a
matter irrespective whether the supplier
(a) resides or has its principal office within or outside the Republic;
(b) operates on a for profit basis or otherwise; or
(c) is an individual, juristic person, partnership, trust, organ of State, an entity owned or directed by an organ of State, a person contracted or licensed by an organ of State to offer or supply any goods or services, or is a public private partnership; or
(d) is required or licensed in terms of any public regulation to make the supply of the particular goods or services available to all or part of the public."
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.