Consumer

Category: Consumer

When is a consumer entitled to a refund?

February 22, 2021 / My Lawyer / Comments Off

Despite tough economic circumstances amidst the COVID-19 pandemic, shops continue to advertise big sales, discounts, and promotional offers. Whether it is Black Friday, Boxing Day, or just an end-of-season sale, there seems to always be a reason for a sale. The question that the consumer may have is: What if I buy something, on a sale or otherwise, and later change my mind about it — am I always entitled to a refund?

As a point of departure, there is no general right of return in South Africa’s consumer law — a consumer cannot simply return a product because they had a change of heart. This is the general rule, and therefore some suppliers may allow consumers to simply return goods when they have changed their minds. In order to avoid disappointment, it is good practice for a consumer to read the Refund Policy of a specific establishment before making any purchases.

The Consumer Protection Act allows for certain instances in which a consumer may return the goods and cancel the contract without paying any penalty. These circumstances are set out below.

1)  Direct marketing

If a consumer bought goods as a result of direct marketing, a five-day cooling-off period applies. A consumer may then, within five days of receiving such goods, return the goods for a refund.

2) Goods do not meet a particular purpose

If a consumer informs a supplier that the goods are being bought to fulfil a particular purpose, and the supplier advises that the goods will meet this particular purpose, then the consumer can return the goods ten days after receiving the goods if it does not meet such a purpose.

3) Goods that have not been seen before the purchase

If a consumer did not have the opportunity to examine the goods delivered before the purchase, the consumer is entitled to inspect the goods upon delivery. If during this inspection, the consumer finds that the goods do not meet the ‘type’ or ‘quality’ that they reasonably expected, they may refuse delivery and receive a full refund.

4) Implied warranty of quality

Goods that are sold to a consumer are sold with an implied warranty of quality, regardless of the contract between the parties. This implied warranty gives the consumer the right to receive goods that are reasonably suitable for the purpose that they are intended to be used for, are of good quality, free of defects and in good working order, and that will be durable and usable for a reasonable period of time. If the goods do not meet this requirement, the consumer can, for up to six months after receiving the goods, either return the goods, get the goods replaced or get the goods repaired. The supplier can only exclude liability in these circumstances if the supplier made the consumer aware of the specific defects and the consumer agreed to receive the goods in that condition.

Conclusion:

It is important to keep in mind that the Electronic Communications and Transactions Act (“ECTA”) will apply to goods and services that are bought online. ECTA has its own consumer protection provisions that apply to online transactions.

Although a consumer is well-advised to read or ask about a supplier’s refund policy before purchasing goods, it is important to note that a supplier cannot contract out of the Consumer Protection Act. The remedies explained above will, therefore, always be available to consumers, if the requirements set out in the Act are met. Consumers may direct complaints that they have regarding suppliers or refund policies to the National Consumer Commissioner.

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. Errors and omissions excepted (E&OE)

When does a foreign system of law apply to your contract?

March 27, 2019 / My Lawyer / Comments Off

Let’s say I own a company in South Africa that makes and sells jewellery. The company is hugely successful and attracts international clients. A client who lives in Canada buys a piece of jewellery from my company, which is transported from South Africa to Canada. However, when the piece of jewellery arrives in Canada, the client finds that it is defective. Which system of law is applicable to the contract: Canadian Law or South African Law?

It is a requirement in the South African Law of Contract that, for a contract to come into existence, an offer to contract must be made by one party to the agreement (“the offeror”), which must then be accepted by the other party to the agreement (“the offeree”). It is pivotal to determine when and where such a contract is concluded, as this will give an indication as to which country’s system of law will govern the contract (assuming that all other elements for a valid contract have been satisfied).

The offeree may communicate his decision to accept the offer to contract by posting a letter to the offeror, or by sending the offeror an email. The method of communication utilised by the offeree will affect the place where and moment when the contract comes into existence; and, ultimately, which system of law is applicable to the contract.

The general rule is that a contract comes into being when and where consensus between the parties has been reached. This is typically the place where and moment when the offeror learns that the offeree has accepted the offer. However, there are exceptions to this general rule, which are discussed below.

Postal contracts

The court in Cape Explosive Works v South African Oil and Fat Industries Ltd 1921 CPD 244 explained that, when an offeree posts an acceptance letter to the offeror, the contract comes into being once the letter accepting the offer is posted to the offeror. In other words, the offeree need not follow up and ensure that the offeror has received his acceptance for the contract to be binding and enforceable.

Section 22 and 23 of the Electronic Communications and Transactions Act 25 of 2002 (“ECTA”)

Section 22 of the ECTA provides that “[a]n agreement concluded between parties by means of [electronic communications] is concluded at the time when and place where the acceptance of the offer was received by the offeror”. Further, section 23 reads as follows: “[electronic communications] used in the conclusion […] of an agreement must be regarded as having been sent by the [offeree] when it enters an information system outside the control of the [offeree] or […] when it is capable of being retrieved by the [offeror]”.

Therefore, unlike with a postal contract, the contract only becomes binding and enforceable when the offeree has sent off his electronic communication of acceptance of the offer to contract and the offeror has received or is able to retrieve such communication. In other words, the ECTA holds that a contract will come into existence where an email appears in the offeror’s inbox, but it has not been read; or, where the offeree leaves a message on the offeror’s answering machine, but the offeror has not listened to it yet.

For example, if X, who lives in South Africa, sends an email to Y, who lives in America, informing him that he accepts his offer to contract, the contract will come into existence at the moment that the email has been sent to the offeror and once it is received or capable of being retrieved by the offeror. For that reason, as the email will be received or be capable of being retrieved in America, the system of law applicable in this situation would be American Law (assuming that all other elements for a valid contract have been satisfied).

Agreement by the parties

As South African Contract Law emphasises the freedom of contract, parties to a contract are entitled to agree to terms stipulating when and where a contract comes into existence.

In sum, the system of law applicable to the contract will depend on whether the parties have agreed on a moment when and place where the contract should come into being. If no such agreement is reached, the applicable system will depend on the means chosen by the offeree to communicate his acceptance of the offer to the offeror.

It is, therefore, advised that parties to a contract agree on a moment when and a place where the contract should come into existence in order to avoid confusion as to which system of law will be applicable to the contract.

Reference List:

Cape Explosive Works v South African Oil and Fat Industries Ltd 1921 CPD 244.
Electronic Communications and Transactions Act 25 of 2002.
Van der Merwe et al Contract: General Principles 4 ed.
Hutchinson et al The Law of Contract in South Africa 3 ed.

Buying a Property on Auction

January 21, 2019 / My Lawyer / Comments Off

Properties sold on auction is not necessarily the bargain buy everyone seems to think it is. This is because the property on auction isn’t necessarily being sold due to financial distress. In today’s times, homeowners have turned to auction as a means of selling their property as soon as possible and for as a high a price as possible. When planning on buying a property on auction, it is important to do your homework and prepare. This is what you need to know about property auctions:

There are different types of properties that can be bought on auction, they include:

Property up for sale by the owners themselves as a means of selling the property as quickly as possible.
Sale in execution. This is a sale due to the financial distress of the property owner.
Property in possession. Property that has been bought back by the bank, in other words, a repossessed property.

What to do before the auction:

Before the auction, there are certain things you can do to prepare, this includes:

Viewing the property before the auction, as these properties are sold “as is”.
Gather additional information on the property being auctioned ahead of time. Find out more about the area, local schools, facilities, asking price for properties in the said area etc.
Make sure to have a copy of the Conditions of Sale. The reason being, before buying this property, it is important to know exactly what you are buying. You could be taking over accounts that have not yet been paid etc.
If you are going to bid on a property, ensure that your finances are ready well in advance.
Finally, if you cannot physically attend the auction, and want to bid by phone, you will have to organise this in advance.

What to do at the auction:

When arriving at the auction, there are certain processes that need to be followed before you can bid on the property, this includes:

When arriving at the auction, you need to register to bid on the property. To register, you will need your ID, proof of residence, and the fee for registration.
Go through the provided Conditions of Sale and ensure that no changes have been made to the document.
Ensure that the auctioneer can clearly see you.
If your bid is successful, you will be instructed to sign the Conditions of Sale as a means of confirming your purchase.
You will then have to pay the auctioneer’s commission which is usually 10% of the purchase price plus VAT, as well as a deposit of 5% of the purchase price.
You will need to have the funds shortly after the auction as this is a guarantee to the seller that you can purchase the property.

What will happen after the auction:

After the auction, if the buyer of the property is dissatisfied with the property for whatever reason, it’s too late. This is because auction properties are sold “voetstoots”, which means “as is”. This is one of the main reasons why it’s so important to see the property as part of your preparation before the auction. It’s also important to note that if the buyer defaults on the sale, the seller can take legal action and force the buyer to fulfil the contract. Before bidding on a property, it is important to make sure that you want to buy and can afford to buy the property being auctioned, as the breaching of contracts comes with serious financial and legal repercussions.

Prize draw or promotional competition – a promoter’s legal compliance checklist

October 26, 2018 / My Lawyer / Comments Off

If one opens almost any newspaper, magazine or website, one is confronted with a myriad of promotional competitions and, especially, competitions conducted using SMS or MMS technology. For this reason, the promoters of such competitions will need to realise that the Consumer Protection Act 68 of 2008 (the “CPA”), which came into effect on 1 April 2011, has certain far-reaching implications which are likely to apply to such competitions and educate themselves as to its specific requirements.

The CPA replaced the repealed Lotteries Act 57 of 1997 and became effective on 1 April 2011. Section 36 of the CPA imposed the stringent definitions of a “promoter” and “promotional competition”, which includes competitions where prizes can be won regardless of whether a participant shows any skill or ability. Given these rather wide definitions and the very low-value threshold of R1.00 prescribed in terms of Regulation 11(4) of the CPA Regulations, it is clear that the vast majority of competitions conducted in South Africa from 31 March 2011 will be governed by the CPA.

Promoters, including promoters of SMS or MMS competitions, will be in contravention of the CPA where:

they indicate that a participant has won a competition if no competition has been conducted, the person has, in fact, not won the competition or the person is required to meet a previously undisclosed condition or to pay a further sum of money in order to receive the prize; or
a participant is informed that he has a right to a prize when, in fact, he does not have such right, where the prize was generally offered to other similar participants, or where the participant is required to pay a further amount for the prize or to purchase any goods or services.

Crucially, section 36(3) requires that a promoter should “not require any consideration to be paid by… any participant… other than the reasonable costs of posting or… transmitting an entry” and Regulation 11(1) specifies that the “reasonable cost of electronically transmitting an entry shall not exceed R1.50”.

A promoter would similarly fall foul of the CPA, where he requires participants to make payment for the opportunity to participate in the competition or where he requires the purchase of any goods or services and the price charged for those goods or services “is more than the price… ordinarily charged for those or similar goods or services without the opportunity of taking part in (the) competition”.

For the purposes of ensuring fairness, the CPA requires that a promoter may not award a prize to any person who is a director, member, partner, employee or agent of, or consultant to, the promoter or to the supplier of any goods or services in respect of the competition.

Practical Requirements

A promoter should ensure that his invitation for participants to take part in his competition includes details on:

how a participant should accept the invitation to participate;
how the results will be determined;
the competition’s closing date;
the means by which the results of the competition will be made public; and
the person from whom or the place from where a copy of the competition rules may be obtained.

The promoter will be deemed to have satisfied these requirements if this information is available directly on the medium through which a person participates in the competition, on a document accompanying any medium or in any advertisement which is published, and which draws attention to the promotional competition.

Any provision in the rules of a promotional competition requiring a prize winner to:

permit the use of his image in marketing materials;
participate in any marketing activity; or
be present when the prize draw takes place, or the winners are announced,

without offering him the opportunity to decline such requirement, will be null and void.

The Regulations also require the promoter to ensure that certain specified professional persons oversee and certify the manner in which the competition was conducted and report his/her findings through the promoter’s internal audit reporting or validation and verification procedures. There is also a strict requirement regarding record keeping for a period of 3 years.

Non-compliance by promoters of the provisions of the CPA and its Regulations may result in the competition being declared void and in contravention of the CPA. The imposed offences under the CPA range from a fine or imprisonment (or both) for a period not exceeding 10 years or a fine or imprisonment (or both) for a period not exceeding 12 months or to both, depending on the severity of the contravention. In addition, administrative fines imposed by the Tribunal in respect of prohibited or required conduct is particularly onerous as such fines are set at the greater of 10% of the guilty party’s annual turnover during the preceding financial year or R1 million.

Conclusion

Promoters of promotional competitions and, in particular, competitions conducted using SMS or MMS technology, should ensure that they are aware of the various requirements and obligations placed upon them by the CPA. Great care should be taken when conducting competitions which will fall within the realm of the CPA as and from 31 March 2011, since the Commission and the Tribunal are likely to take a very dim view of promotional competitions which do not comply with the requirements of the CPA and its Regulations.

Reference List:

The Lotteries Act 57 of 1997
The Consumer Protection Act 68 of 2008 and its Regulations
Naudé T & Eiselen S, Commentary on the Consumer Protection Act, Juta, 2014

THE IMPACT OF THE CPA ON FRANCHISE AGREEMENTS

April 18, 2018 / My Lawyer / Comments Off

With franchises becoming a common phenomenon worldwide and franchisors, traditionally, benefitting from a strong bargaining position when negotiating franchise agreements, regulation of the industry has become inevitable and has South Africa’s legislature initiated this regulation through the Consumer Protection Act No.68 of 2008 (“CPA”), which was signed into law on 24 April 2011.

The CPA has forcibly changed the way franchises operate, in that franchisees are deemed to be consumers in terms of the CPA and now have a whole variety of consumer rights. The CPA and its detailed regulations, regulate the whole franchising process, which includes the “franchisor-franchisee relationship” and more importantly, the franchise agreement itself, which must contain prescribed clauses and information in order to be CPA compliant.

A fundamental change affecting the franchise industry is that every franchise agreement must now contain a cancellation clause, failure of which the agreement may be declared void. In terms of section 7(2) of the CPA, a franschisee may cancel a franchise agreement, without costs or penalty, within 10 business days after signing such agreement. Under this provision, if the franchisee excercises his right to cancel the agreement, the franchisor has no remedy to recover from the franchisee any loss suffered as a result of the cancellation.

In addition to the aforesaid, a franchisor must provide a potential franchisee with a disclosure document, in terms of Regulation 3 of the CPA, at least 14 days before the franchisee signs the franchise agreement. This document is aimed at giving the franchisee all the information required in order to make an informed decision. The document must, as a minimum, contain the following:

the number of individual outlets franchised by the franchisor;

the growth of the franchisor’s turover, net profit and the number of individual outlets, if any, franchised by the franchisor for the financial year prior to the date on which the prospective franchisee receives a copy of the disclosure document;

a statement confirming that there has been no significant or material changes in the company’s or franchisor’s financial position since the date of the last accounting officer, auditor’s certficate or certificate by a similar reviewer of the company or franchisor, that the company or franchisor has reasonable grounds to believe that it will be able to pay its debts as and when they fall due; and

written projections of potential sales, income, gross or net profits or other financial projections for the franchised business.

Furthermore, the CPA governs the right of a franchisee to select suppliers in terms of section 13 of the CPA. The only platform in which the franchisor can now dictate supply are those goods which are branded or related to the branded products or franchise service.

The CPA also prohibits false or misleading representations concerning the performance, characteristics and benefits of the business, which is regarded as unfair, unreasonable and unjust contract terms. Franchise agreements must also contain provisions that prevent unreasonable fees, prices or other consideration and conduct that is not reasonably necessary for the protection of the legitimate business interests to the franchisor, franchisee or franschise system.

Sections 7 and 51 read together with Regulation 2 of the CPA, very specifically mark the parameters of clauses that must be included, as well as some that may not be included, in a franchise agreement.

Current and future franchise agreements will be largely impacted by the CPA and therefore business owners must acquaint themselves well with the ambit and workings of the CPA before entering into a franchise agreement. If you are a franchisee, it will benefit you greatly to make sure that you understand your rights and that you are not coerced into entering into a franchise agreement.

The practical effects of non-compliance with the CPA when negotiating and concluding franchise agreements have become apparent in rulings and findings by the National Consumer Tribunal, Consumer Court and National Consumer Commission, which do not tolerate any non-compliance with the strict provisions of the CPA. Readers are thus advised to obtain legal counsel before entering into a franchise agreement.

References:

Consumer Protection Act. No 68 of 2008

Naudé T & Eiselen S, Commentary on the Consumer Protection Act, Juta, 2014

THE CONSUMER PROTECTION ACT AND YOUR RIGHTS

May 19, 2017 / My Lawyer / Comments Off

The South African Consumer Protection Act, No. 68 of 2008 was signed on 24 April 2009 and the purpose of the Act is to protect the interests of all consumers, ensure accessible, transparent and efficient redress for consumers who are subjected to abuse or exploitation in the marketplace and also to give effect to internationally recognised consumer rights. The Consumer Protection Act define a consumer as any person to whom goods and services are marketed, who is a user of the supplier’s goods, enters into a transaction with the supplier or service provider of any services and products.

If you have a complaint and the supplier won’t resolve it for you, you can complain to your provincial Consumer Affairs Office or the National Consumer Commission as well as other bodies.

The Consumer Protection Act:

ensures that you are treated as an equal and protects you against discrimination in economic transactions.
protects your privacy and ensures fair practice when goods or services are marketed to you.
means you have the right to choose the agreements you enter into and continue with.
gives you the right to the disclosure of information so that you can make informed choices.
protects you against fraud and other dishonest practices.
makes sure that you don’t have to agree to unfair conditions in the small print.
allows you to return things which don’t work properly.
protects you against goods and services that can harm you.
makes suppliers compensate you if they have caused you a loss.
ensures that you are educated on consumer issues and the results of your
choices.
makes it possible for you to form groups to promote your interests.

The Consumer Protection Act can help consumers in dealings which involve advertising, marketing, promoting, selling, supplying and delivering or repairing of goods and services in South Africa.
You are a consumer if you have made a deal with a supplier, for example, when you pay for goods or services, or if goods or services are marketed to you.

Goods include things, but also information and data and the licence to use it. Services include receiving advice or training you pay for, transport of people or goods, transactions at restaurants and hotels, entertainment and access to electronic communication. Employment relationships, credit agreements, deals between two private consumers and goods or services supplied to government do not fall under the Consumer Protection Act.

References:

http://www.saconsumercomplaints.co.za/your-rights/

http://www.legal-aid.co.za/selfhelp/?p=422

I BOUGHT SOMETHING THAT DOESN’T WORK

August 18, 2016 / My Lawyer / Comments Off

Sarah buys furniture from Mark who promised her that the furniture is of good quality. However, he doesn’t notify her about problems with the furniture. Later, Sarah discovers that some of the chairs she bought have faulty joints, meaning they can’t be used properly. This is what’s called a latent defect and Sarah will be able to claim from Mark for the furniture not fulfilling its purpose.

A patent defect or a latent defect?

A patent defect is when there’s a problem with a purchased item but it was clearly visible and obvious to the buyer when the contract was signed. If the furniture that Sarah bought had a patent defect, such as a chair leg missing, it would be assumed that she knew about it and the law would not protect her.

NOTE: A defect is something that makes the product less useful or completely useless. A product not looking as good as you thought is not a defect. A piece of furniture with a stain on it can still be used normally. If the product has broken or missing parts, meaning it can’t be used properly, it’s a defect.

If the product you bought has a defect affecting its usability and purpose, then the seller is liable and you as the buyer can claim from them. You should also take into account if the contract had a “voetstoots” clause, meaning that you are buying a product based on its appearance or “as is”. If this is the case the seller would not be held accountable for any defects with the product, latent or patent.

What can I get back from the seller?

If the product you bought has a latent defect you can get a price reduction or a refund for the price you paid. A price reduction is the difference between the price you paid and the true value of the product. A full refund includes the price you paid, interest, maintenance costs and the cost of receiving the product. A full refund would also mean that you need to return the product that you got under the contract.

If a defect has caused you harm or damaged your property, for instance, you could possibly also claim this amount as compensation from the seller.

Who is a trader and who is a seller?

It’s important to keep in mind that there’s a difference between someone who is a trader and a seller. A trader is someone who makes a living from selling products, whereas a seller is an ordinary person like Mark in the example above. A trader who specialises in particular products and boasts having a specialized knowledge is held to a higher standard than an ordinary seller.

Sales talk or latent defect

It’s normal for sellers or traders to do the best to sell their product. This usually means “sales talk” or boasting about the products value and usefulness. They are allowed to do this, however, if they make statements about the product that turn out to be false, such as claiming the product can do something that it actually can’t, the law will be in your favour and protect you in the same way as a latent defect.

Before you agree to buy anything from a seller or a trader make sure you inspect the product first and make note of any defects there might be. If you neglect to inspect the product it could be more difficult for you to get compensation from the seller if there is a problem in the future.

Reference

“What you should know about Contracts”. 2009. The Western Cape Office of the Consumer Protector. Department of Economic Development and Tourism. Accessed from: https://www.westerncape.gov.za/ on 13/05/2016.