Category Archives: CPA

Be acquainted with the law relating to labelling and advertising

A1_BWhat is in a label or advert?

Labelling is the transmission of information via letters, figures and artistic characters.

Advertising goes a step further as it engages in visual and/or oral creations to endorse or to promote the sale of goods or services through various mediums. 

Why is this definitional component of marketing and consumer / business outreach important?
Our laws, in an attempt to protect us against unfair labelling and advertising, require factual and honest labelling and advertising. This principle, which requires honesty in advertising, calls for factual claims and disallows misleading claims, is encoded in the Advertising Standards Authority (ASA) Code of Conduct. The Consumer Protection Act 68 of 2008 (CPA) reinforces this requirement of disclosure of all relevant information and further requires that such disclosure must be in plain language. 

Preventing or minimising exposure to legal claims for unfair labelling and advertising

  • Have a proper internal advertising standards protocol. This protocol should set out the legal guidelines for all advertisements in whatever format or media, whether they are above the line or below the line, or for public relations releases;
  • Ensure that marketing panels and public relations teams are correctly trained on this protocol. Once trained, continue to ensure compliance as they are generally the teams that are involved in the crafting or supporting of advertisements or releases. At the same time make sure your external advertising and public relations agency is fully compliant and conscious of the laws relating to your specific market;
  • Take care to ensure that all advertisements, public relations releases and labels are reviewed by internal counsel and by external counsel before release or publication.

Adherence to the above guidelines will:

  • ensure factual and legal review and minimise potential CPA claims, as well as minimise ASA review and potential penalties;
  • counter trademark infringement and identify any unauthorised use;
  • prevent false marking if an advert or product affixes the word “patent” to an unpatentable item;
  • prevent both unfair comparative labelling and advertising that promotes your product as superior to your competitors’ without a factual and objective basis.

We recommend that an advertising register be maintained. The register will ensure that a sense of control and accountability is reached, as all releases are documented in the register.  By including a provision that all material be sent for legal review to confirm whether they have been reviewed or not, no unacceptable items will slip through.

Knowing the law relating to labelling and advertising in your field could save you endless headaches, unnecessary litigation, and money.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.

Jurisdiction of courts in matters involving companies

A3_BTraditionally, and under the previous Companies Act, a company could have a principal place of business and a registered office.  A company could, for instance, conduct its business at one office and also have a registered office with its auditors. In terms of the 1973 Companies Act any division of the High Court where a company’s registered office or its principal place of business was located, would have jurisdiction. More than one Court could, as a consequence, have jurisdiction in proceedings where a company was involved.

The new 2008 Companies Act, which repealed to a large extent the 1973 Act, does not have a similar wording that provides for more than one address. In the matter of Sibakhulu Construction (Pty) Ltd vs Wedgewood Village Golf Country Estate (Pty) Ltd (Nedbank Intervening) 2013 (1) SA 191 the Western Cape High Court dealt with the question of which Court would have jurisdiction where a company has a registered address different from its principal place of business.

The matter revolved around business rescue proceedings and winding up proceedings. The Court remarked that Section 128 of the Act makes reference to only “…the High Court…”  This wording denotes that a single Court would have jurisdiction over a company, and not more than one Court as in the previous Act. In dealing with the matter the Court considered the interpretation of the new Act.

Section 23(3) of the new Act specifically states that a company must continually maintain at least one office and register the address of its office or of its principal office if the company has more than one office. This office will, under the new Act, be the company’s registered office.  Section 23 makes it clear that this office must be maintained by the company itself and the following Section deals with documentary records to be kept at the address. The Court remarked that the new Act retained the institution of a registered office with which the outside world could make contact.

Unfortunately the Act does not define “principal office” but the Court remarked that, from a reading of the Act, it is clear that the intention is to denote the place where the administrative business of the company is centred. It follows, the Court suggested, that this office should also be the principal place of business. The Court concluded that the principal place of business and the registered office have to be at the same address under the new Act.

Reference was further made to Section 7 of the new Act where it is stated that the purpose of the Act is to provide a “predictable and effective environment for the efficient regulation of companies”. The Court held the view that to give effect to the purpose of the Act as set out in Section 7 it would follow that, in terms of Section 23, a company can only reside at its registered office, which means that only a single court can have jurisdiction.

Companies should be aware of this judgement and make sure that they register their principal place of business as their registered address.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.

The consumer’s rights under the Consumer Protection Act

A1 edit BCan a consumer take you, the service provider, to court because they did not understand some of the terms and conditions of your signed contract? Beware, the answer is Yes!

From April 2011 the Consumer Protection Act came into full effect with the result that it is now against the law to use difficult-to-understand language in any business document or contract.

Business usually comes with some kind of paperwork, whether it’s a contract, a letter of agreement or even an instruction booklet. These vital documents are often written in language that is hard to understand for the average consumer, which is why there are specific Plain Language regulations in The Consumer Protection Act to prevent consumers signing documents they do not understand.

Protecting the consumer

The Act’s express purpose is to make sure consumers are not treated unfairly – intentionally or not. This means that using plain language is more crucial than ever. From now on, using obscure and confusing wording, especially in binding contracts, is not allowed. Quite simply, it’s illegal!
Too many consumers have landed in big trouble, especially financial trouble, because they haven’t understood what they’ve signed. Sometimes contracts are written in bloated, bureaucratic jargon just because that’s the way it has always been, or because the people writing the contracts don’t know any other way to do it. Often, though, unscrupulous businesses have used complicated language on purpose, as a way to trick consumers into paying for something they can’t afford, to sign away their rights, or to agree to unfair terms and conditions.

Defining plain language

The Consumer Protection Act defines plain language in Part D, Section 22 as follows:

“For the purposes of this Act, a notice, document or visual representation is in plain language if it is reasonable to conclude that an ordinary consumer of the class of persons for whom the notice, document or visual representation is intended, with average literacy skills and minimal experience as a consumer of the relevant goods or services, could be expected to understand the content, significance, and import of the document without undue effort, having regard to:

  1. The context, comprehensiveness and consistency of the notice, document or visual representation;
  2. The organisation, form and style of the notice, document or visual representation;
  3. The vocabulary, usage and sentence structure of the notice, document or visual representation; and
  4. The use of any illustrations, examples, headings, or other aids to reading and understanding.”

This means that one won’t be permitted to word things so widely that they can be understood in several ways. The Act states that if there is any doubt about the meaning of certain words or terms and conditions, the benefit will go to the consumer.

Even advertising and marketing may no longer contain any ambiguity. Advertisements won’t be allowed to exaggerate and they will have to be easy to understand, fair and honest. The Act states that service providers will have to spell out everything in words that consumers can understand, alternatively the consumers have the right to full disclosure and information in plain and understandable language.

So, don’t delay. If you have a business document or contract that has been used for generations you might have to take a second look at it to edit or reword it so that it complies with the Consumer Protection Act.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.