South Africa: Landmark Consumer Protection Bill Aims To Provide A Legal Framework For Consumer Protection In South Africa

Last Updated: 27 July 2006

By Janet Mackenzie, Emma Kingdon, Sam Robertson and Zintle Mjali

The Department of Trade and Industry (dti) embarked on a review of the consumer legislative framework that culminated in a draft green paper on consumer policy in September 2004. The policy seeks to promote a coherent and consistent framework for the regulation of consumer "business interaction". The first draft of the Consumer Protection Bill was published for information and comment on 15 March 2006.

The Bill is a milestone in South Africa as it aims to provide a legal framework for consumer protection. By attempting to codify its common law with specific regard to the rights of consumer and the obligations of those providing services and products to them, South Africa is following in the footsteps of most first world countries.

The UN guidelines for consumer protection were broadened in 1999, requiring that governments develop and maintain strict consumer protection policy and protect consumers from contractual abuses such as one-sided contracts and unconscionable conditions of credit.

The complex Bill is wide-ranging and ambitious. It draws on a number of pieces of existing legislation (the Business Names Act, the Sale and Services Matters Act, the Price Control Act, the Trade Practices Act, the Consumer Affairs Act and the Businesses Act), forming a consumer matrix that will ultimately be policed by a national consumer regulator.

An entirely new way of doing business

One of the major effects of the Consumer Protection Bill, should it be enacted in its current form, is that South Africa's common law will be replaced by the codified principles detailed in the Bill.

Established ways of conducting every day commercial transactions will be altered and in a number of respects the proposed changes will remove the current protections afforded to suppliers when dealing with unscrupulous consumers.

There is also a real danger that the proposed principles will not adequately cater for every business eventuality and that the uncertainty created through the removal of established common law principles will result in increased litigation and a lack of confidence in South Africa's economy. Some of the more contentious provisions are dealt with below.

In terms of section 20 to the Bill, a consumer is deemed to have accepted goods when -

  • the consumer expressly or implicitly communicates to the supplier that the consumer has accepted them;
  • the goods have been delivered to the consumer and the consumer does any act in relation to them that is inconsistent with the supplier's ownership of the goods, or;
  • after the lapse of a reasonable time the consumer retains the goods without intimating to the supplier that the consumer has rejected them.

The effect of these provisions is that the time period for the return of goods is substantially widened and suppliers will be considerably exposed where goods have been used or damaged, or where goods are perishable or not capable of return due to health or hygienic reasons.

Section 21 of the Bill provides that if a consumer receives unsolicited goods from a supplier, the consumer may retain the goods without having to pay for the goods or return them to the supplier. Loss or damage to the goods while in the possession of the consumer are to be borne by the supplier, unless the supplier notifies the consumer within 10 business days after receipt that they were delivered in error and arranges to recover the goods, at its own expense. Where the supplier fails to take these steps, ownership in the goods will pass unconditionally to the consumer. This section undermines the right granted to the owner of goods to institute action for the return of goods under circumstances where there was no intention to transfer ownership due to fraud, theft or mistake.

The Bill places an onerous burden on suppliers who commit to supply goods or services on a specified date. Where a supplier fails to supply goods and services on a committed delivery date, the supplier will be liable to –

  • refund to the consumer any amount paid together with interest at the prescribed interest rate;
  • compensate the consumer for breach of contract in an amount equal to the full price of the committed goods or reserved services; and
  • pay the consumer consequential damages in an amount equal to the total of any economic loss, and loss of anticipated use or enjoyment, sustained by the consumer as a consequence of the supplier's breach of the contract.

These provisions significantly alter the common law remedies available for breach of contract and the basis for awarding damages. There is also no separate right to claim for the loss of enjoyment and use in goods and services under South African contract law.

The Bill impacts upon notices or agreements which limit the liability of a supplier. In order to be effective, any exclusion of liability must be drawn to the attention of the consumer, including the fact, nature and effect of the provision. The provision must also be in plain language and signed and initialled by the consumer where the provision is in a written agreement. If the exclusion is in respect of a hazard which the consumer could not have reasonably contemplated or could result in serious injury or death, the exclusion, nature and effect of the potential hazard must be specifically drawn to the attention of the consumer and must be signed or initialled by the consumer. Suppliers are also obliged to ensure that consumers are able to read and comprehend the exclusion.

The exclusion of liability provision will impact upon the practice of posting terms and conditions on websites and suppliers will have to ensure that written agreements are concluded in respect of telephonic or electronic transactions. This provision could conceivably also extend to user manuals, pamphlets, package inserts and warnings placed on products, which will render compliance impossible. It will also be impractical for suppliers to ensure that the provisions of this section are complied with where exclusion of liability notices are posted at the entrances to retail outlets, shopping malls, places of entertainment, schools or sports stadiums.

Section 61 provides that consumers are entitled to receive goods which will be useable and durable for a reasonable period of time and that are free of any product failure, defect or hazard that would render the utility, practicability or safety of the goods to be less than persons are generally entitled to expect, regardless as to whether a product failure, defect or hazard is patent or latent. The subjective manner in which "defects" are defined in the Bill is contrary to the common law which regards a defect as being any non-conformity with the manufacturer's specifications or any abnormal attribute which destroys or impairs the utility of goods for the purpose for which they have been sold. The alteration of established principles in respect of liability for patent and latent defects as well as the implied exclusion of voetstoots sales will lead to legal uncertainty and increased litigation.

Under section 71, producers, distributors or suppliers of goods in addition to being liable for consequential damages will be strictly liable for any damages in respect of goods where such damages arise due to product failure, defect or hazard or as a result of inadequate instructions or warnings. As strict liability is not even imposed on manufacturers under South African common law, it is unfair and prejudicial to hold suppliers or distributors liable for acts or omissions where suppliers are not the manufacturers of goods and are thus not in a position to exercise any control over the instructions or warnings associated with supplied goods. The imposition of strict liability or no fault liability will open the door to limitless claims and an increase in litigation against producers, distributors or suppliers of goods. This will inevitably result in an increase in insurance costs and generally in an increase in the costs of doing business in South Africa.

Consumer Protection Institutions and enforcement of consumer rights

The Bill provides for the establishment of a National Consumer Protection Commission, which is designed to be the watchdog of consumer protection issues and the first port of call for the lodging of complaints. It is also within the mandate of the Commission to report to the Minister of Trade & Industry on consumer affairs in general and to give advice concerning consumer protection policy, including advice in respect of required amendments to legislation.

Complaints of alleged infringements of consumer rights may be lodged with the Commission and it will then investigate such complaints, if investigation is merited. In addition to the fact that the Commission must investigate or resolve all complaints of prohibited conduct lodged with it, the Commission also has the authority to initiate investigations itself, in its own name.

When a complaint is lodged, the Commission may issue a notice of non-referral if it has concluded that the complaint is unfounded or frivolous. If the complaint does not fall within this category, the Commission may elect to refer the matter to an appropriate dispute resolution channel, including competent ombudsmen, a provincial consumer authority, a consumer court or an alternative dispute resolution agent.

The Commission's inspectorate has considerable investigative powers and can order the production of any book or document or that any person must appear before the Commission to be interrogated in respect of a matter under its investigation.

At the conclusion of any investigation, the Commission may, if it is satisfied that there are grounds to do so, elect to refer the matter for adjudication before a consumer court or the Consumer Tribunal, or it may issue notices of compliance or enter into a consent order with the party under investigation.

Proceedings of the Tribunal will be akin to those of a court, where the Commission or the referring party will act as prosecutor and the respondent business as defendant.

Conduct referred to the Tribunal for determination may attract a penalty of up to 10% of the guilty party's turnover for the preceding financial year, subject to a maximum of R1 000 000.

Promotional competitions

Currently, all competitions which involve the promotion of goods or services are regulated by section 54 of the Lotteries Act and its regulations. Those regulations have been controversial, to say the least, as they contain prohibitions which are ambiguous and extremely restrictive.

Some of the uncertainty surrounding those regulations is removed by the provisions of section 42 of the Consumer Protection Bill, which repeals section 54 of the Lotteries Act, but not without consequence.

As with the Lotteries Act, the Bill defines a promotional competition as "any competition, game, scheme, arrangement, system, plan or device for distributing prizes by lot or chance". "Prize" is given a wide definition which includes rewards, price reductions, concessions, enhancements or discounts. The Bill's application is limited to those competitions that are conducted in the ordinary course of business for the purpose of promotion and where the prize exceeds a threshold to be prescribed by the Minister charged with this portfolio.

While section 54 of the Lotteries Act does not apply to competitions where no payment or other consideration is required for the right to compete, there is no such explicit saving in respect of section 42 of the Consumer Protection Bill. In fact, these provisions as currently drafted are substantially lacking in clarity as to whether the charging of any consideration in respect of participation in a promotional competition is permissible. While one section justifiably outlaws the practice of requiring the purchase of goods or services and charging more than the price ordinarily charged for such goods or services, other sections seem to prohibit the purchase of goods or services as a requirement for the participation in the competition. This issue needs to be clarified, as making such a common practice unlawful would effectively make it impossible to conduct most types of promotional competitions.

What does seem clear is that competitions where participants are required to enter via SMS, post, email or telephone, will become illegal as a result of the provision that the payment of any consideration for access to the competition will be unlawful. This will severely restrict the manner in which competitions are conducted and more than likely reduce marketing opportunities.

It is also illegal to offer a prize which is subject to a previously undisclosed condition or to require the winner to pay further charges for the prize after the results of the competition has been announced. It is therefore necessary to advise participants upfront of any requirements they will need to meet for the enjoyment of a prize, such as being in possession of a driver's licence where a car is the prize, or where certain necessary costs are excluded from the prize.

The most abhorrent provision, possibly, is the requirement that every "promoter" (being a person who directly or indirectly promotes, sponsors, organises or conducts a promotional competition, or for whose benefit such a competition is promoted, sponsored, organised or conducted) file an abstract of the competition rules in the prescribed manner and form with the National Consumer Commission established in terms of the Bill no later than the date on which the competition is first offered to the public. For organisations that run numerous promotions at any one time, this is a very onerous requirement. .

Equally alarming is the provision that all offers to participate in a promotional competition and advertising material related to the competition must, amongst other things, state the odds of winning the prize. This will be impossible to predict at the outset of the competition, and could result in incorrect statistical information being given to the public. In addition, the Minister is given the power to prescribe the minimum odds for prizes or categories of prizes offered in terms of any promotional competition. How any promoter can be expected to comply with such a prescription is not understood, unless the promoter limits the number of entries, which in itself can impact unfairly on a consumer.

It is appreciated that some attempt has been made to clarify issues which arise from section 54 of the Lotteries Act, but the task has not been entirely successfully executed. Where there was clarity before, there is now confusion. In addition, those involved in marketing endeavours are throwing their hands up in horror at what is to be expected of them under this new regime.

The retrospective application of the legislation

There is a presumption in South African common law against retrospective application of legislation, which has a long history. Despite this, the Consumer Protection Bill proposes that its application be extended to agreements that were entered into prior to its promulgation and which will still be valid on or after the second anniversary date of the Bill's promulgation and where  –

  • there is any pre-payment or services, deposit or right to a refund under that agreement;
  • the property of the consumer is held by the supplier on or after the promulgation of the Bill; and
  • any action, forbearance, obligation or right contemplated in that agreement will be performed or enjoyed on or after the promulgation of the Bill.

The retrospective application of the Bill may have undesirable consequences for both the consumer and the supplier. Most pre-existing agreements will be unlawful as they are likely to contravene the Bill on its promulgation. The Bill has not provided for a transitional period within which pre-existing agreements should be required to comply with its requirements. Such a provision would avoid automatic contraventions of the Bill and would also enable suppliers time to amend their pre-existing contracts.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.