Commercial Law VBB 220 PDF

The Industrial Revolution presented a complete shift in human societies across the globe between the 18th and 19th centuries, beginning in Britain and resulted in the development of mass production, the sustained growth in personal income and purchasing power as well as the innovation of faster and...

The Industrial Revolution presented a complete shift in human societies across the globe between the 18th and 19th centuries, beginning in Britain and resulted in the development of mass production, the sustained growth in personal income and purchasing power as well as the innovation of faster and more reliable means of transport, production and communication. Massification of the Consumer Market : As goods became more complex consumers began to find difficulty in evaluating the basic features of transactions with mass distribution creating new marketing and advertising means with the aim of maximising profits for businesses and corporations. Molony Committee : The Molony Committee determined that consumers faced challenges such as an increase in the complexity of goods, vulnerability, reluctance to pursue legitimate claims, insufficient consumer protection organisations and inadequate law enforcement. The Constitution and Consumer Protection Consumer Protection serves as an extension of the right to dignity and the protection thereof enshrined in the Constitution, however, the effect of the Constitution on consumer protection has been slow as a result of conflicting ideologies, however, the courts generally prefer the classical model. 1. Classical Model : The autonomies of parties, freedom of contract, minimal supervision and pacta sunt servanda. 2. Neo-liberalism and Fairness Model : The rectification of unequal bargaining power, introduction of consumer protection legislation. Procedural Fairness : Sets the scene for conclusion of a contract in circumstances that are fair, promotes transparency and attempts to balance interest of both parties in a transaction. Substantive Fairness : A person oriented approach, and takes into account the physical, social, economic and property interests of consumers and the effect on those interests by the terms in agreements in the interests of fairness to advance social and economic justice. 1. Grey-listed terms : T’s and C’s presumed to be unfair. 2. Black-listed terms : T’s and C’s that are completely and absolutely prohibited. The Consumer Protection Act does not apply to the promotion of any goods or services, as well as any transaction or agreement or goods supplied to a consumer before its general effective date 31 March 2011. Section 1 of the CPA - Consists of the definitions for the purposes of the Act. Agreement : Arrangement between two or more parties to establish a relationship in law between them. Business Days : Number of days excluding public holidays and weekends. Consideration : Anything of value given and accepted in exchange for goods and services, including monetary means, credit, awards, assurance, barter and labour. Consumer Agreement : Agreement between a supplier and a consumer other than a franchise agreement. Supplier : A person who markets goods and services to a consumer. Electronic Communication : Communication by means of electronic transmission. Market : To promote or supply goods and services. Goods : Anything marketed for human consumption, any tangible property, any intellectual property or intangible object on a written medium, a non–service legal interest in land and immovable property and gas, water and electricity. Juristic Person : A body corporate, partnership, association or a trust in terms of the Trust Property Act. Consumer 1. A person to whom goods and services are marketed in the ordinary course of the supplier’s business. 2. A person who has entered into a non–exempted transaction with a supplier in the ordinary course of business. 3. A user of goods or a recipient or beneficiary of services in specific circumstances. 4. A franchisee in terms of a franchise agreement. Purpose of the Consumer Protection Act Section 3 of the CPA To promote and advance the social and economic welfare of consumers in SA by: - Establishing a legal framework for the achievement of a fair and responsible consumer market. - Reducing any disadvantages against the vulnerable consumer. - Promoting fair business practices. - Protecting consumers from unconscionable, unfair, or improper trade practices; and deceptive or fraudulent conduct. - Improving consumer awareness and information. - Promoting consumer confidence and the development of consumer responsibility. - Providing for a consistent and efficient system of consensual resolution of disputes arising from consumer transactions. - Providing for an accessible, consistent, harmonised and effective system of redress for consumers. Section 3(1)(b) of the CPA - The vulnerable consumer group includes low-income persons, people living in remote, isolated or low–density population areas; minors, seniors or other similarly vulnerable consumers; and people whose ability to read and comprehend any text is limited by low literacy, vision impairment or fluency in the language in which the representation is produced. Fundamental Consumer Rights The Consumer Protection Act protects eight fundamental consumer rights, namely, the right of equality in the consumer market, right to privacy, right to choose; right to disclosure and information; right to fair and responsible marketing; right to fair and honest dealing; right to fair, just and reasonable terms and conditions; and right to fair value, good quality and safety. Section 4(1) of the CPA - The following persons may approach a court, NCC or NCT, alleging that a consumer’s rights has been infringed, a person acting on own behalf, an authorised person acting on behalf of another as a member of a group or class of affected persons acting in the public interest, an association on behalf of members. Locus Standi : The condition that a party seeking a legal remedy must show they have, by demonstrating to the court, sufficient connection to and harm from the law or action challenged to support that party's participation in the case. Section 2(10) of the CPA - No provision of Act must be interpreted to preclude a consumer from exercising any rights afforded in terms of the common law. Common Law warranties include the right to delivery, right to warranty against latent defects and right to warranty against eviction. Application of the Act Section 5(1)(a–d) of the CPA - Every transaction occurring within the Republic (unless expressly excluded). - The promotion or supply of goods and services in the Republic unless: goods or services could not reasonably be the subject of transaction to which the Act applies; or the goods or services exempted (in terms of section 5(3) or (4)). - The goods or services supplied where the Act applies, irrespective of whether those goods or services are supplied together or separate with any other goods. - The goods that are supplied where the Act does not apply but only to the extent provided for in subsection (5). Arrangements to be regarded as a Transaction Section 5(6) of the CPA - Where a club, Trade Union, Society or other supplies goods and services in its ordinary course of business to its members regardless of charge or economic contribution to become a member; a solicitation of offers to enter into a franchise agreement; offer by a potential franchisor to enter into a franchise agreement with a potential franchisee; a franchise agreement or an agreement supplementary to a franchise agreement; and the supply of any goods or services to a franchisee in terms of a franchise agreement. Exclusions Section 5(2) of the CPA - Act does not apply to any transaction where, the State is a consumer, the consumer is a juristic person whose asset value or annual turnover, at the time of transaction, equals or exceeds 2 Million (the threshold value determined by the Minister in terms of section 6), the transaction constitutes a credit agreement under the NCA. Here, NCA will apply to credit agreement whereas CPA will apply to agreement concerning the goods or services themselves, services in terms of employment contract and a collective bargaining agreement or collective agreement. Doyle v Killeen and Others I. An objective test must be used and determined the factors taken into account by NCT to determine if the CPA applies II. Whether the person has a registered business. III. The nature of the business that the person engages in. IV. The nature of the goods normally sold by the person. V. The frequency with which the goods are sold by the person. VI. Whether the person advertises or markets his goods on a frequent or ongoing basis. Eskom Holdings Ltd v Halstead–Cleak I. A consumer to supplier relationship had to be present for the CPA to apply. In this case the respondent was held not to be a consumer as he had not entered into transaction with Eskom as supplier or producer of electricity in the ordinary course of Eskom’s business; and was not at the time utilising the electricity as a recipient or beneficiary thereof. II. Essentially, the goods or services at question must’ve been supplied in the supplier’s ordinary course of business for CPA to apply. Inconsistencies with Other Legislation Section 2(8) of the CPA - If inconsistency between any provision of Chapter 5 of this Act and a provision of the Public Finance Management Act, 1999 or the Public Service Act, 1994 the provisions of the Public Finance Management Act, or of the Public Service Act, prevail. Section 2(9) of the CPA - If there is an inconsistency between any provision of this Act and a provision of any Act not contemplated in subsection (8), they apply concurrently; if not: the provision that extends greater protection to the consumer applies. With hazardous chemical products only the provisions of the CPA relating to consumer redress will apply. Section 4(3) of the CPA - If a provision has more than one meaning the court must prefer the meaning which best promotes the spirit and the purpose of the CPA especially vulnerable consumers. Section 8(1) of the CPA : A supplier may not unfairly: - Exclude any person or category of persons from accessing any goods or services offered by the supplier. - Grant any person or category of persons exclusive access to any goods or services offered by the supplier. - Assign priority of supply of any goods or services offered by the supplier to any person or category of persons. - Supply a different quality of goods or services to any person or category of persons. - Charge different prices for any goods or services to any persons or category of persons. - Target particular communities, districts, populations or market segments for exclusive, priority or preferential supply of any goods or services. - Exclude a particular community, district, population or market segment from the supply of any goods or services offered by the supplier. Section 8(2) of the CPA : - Supplier may not treat a person or group differently in a manner that amounts to unfair discrimination on grounds set out in Section 9 of the Constitution or Chapter 2 of Equality Act when the supplier does the following: - Assessing ability to meet obligations  - Deciding whether to enter into a transaction - Determining aspects of costs - Interacting with consumer at place of business or in the course of display of goods and services - Selecting ,preparing, packaging of goods - Proposing and agreeing on t’s & c’s - Assessing or requiring compliance - Exercising right as supplier - Determining whether or not to continue with agreement - In the reporting of personal information Section 8(3) of the CPA - The above also applies when a consumer that is an association or a juristic person, to prohibit unfair discrimination against them. Reasonable Grounds of Differential Treatment Section 9(1) of the CPA : It is not a contravention of Section 8 for a supplier to: a. Refuse to provide goods or services to a minor or request reasonable consent from the parent or guardian of an unemancipated minor in accordance with any public regulation; or as a reasonable precaution to protect the health, welfare or safety of a minor. b. Refuse on reasonable grounds to enter into an agreement with a minor; or continue, or renew, an agreement unless the supplier has reason to believe that the minor is emancipated. c. Reasonably designate any facility or service, for the exclusive use of minors generally; minors who are above or below a specified age, or between specified ages; and adults who have attained a specified age of at least 60 years. d. Advertise, or supply, any goods or services at a discounted price solely on the basis that the consumer is a minor who has not yet attained a specified age; or is an adult who has attained a specified age of at least 60 years. Section 9(2) of the CPA : A supplier may provide separate facilities for the exclusive use of persons of each gender; or offer to supply or provide access to a facility exclusively to persons of one gender. Section 9(3) of the CPA : A supplier may market any goods or services to express a preference for a particular group of consumers if the goods or services are reasonably intended or designed to satisfy any specific needs of that particular group of consumers. Section 9(4) of the CPA : Nothing prohibits the court's authority to consider the reasonableness of conduct and whether the unreasonable conduct is unfair in terms of the Constitution or Equality Act; or determine whether the conduct contemplated in Section 9 was fair in the transaction or marketing of goods or services. Jurisdiction of the Equality Court Any person has the right to approach the Equality Court if their right to equality has been contravened with the court only having jurisdiction over matters relating to Part A of the Consumer Protection Act. Section 10(1) of the CPA : With an alleged contravention a consumer may either institute proceedings before an equality court; or file a complaint with the Commission, which must refer the complaint to the equality court, if the complaint appears to be valid. Section 10(2) of the CPA : In any proceedings contemplated in this section: 1. There is always a presumption of unfair discrimination with any differential treatment, unless it is established that the discrimination is fair.  2. The Court may draw an inference that a supplier has discriminated unfairly if the supplier has done anything in Section 8 which constituted differential treatment in comparison to another consumer; or if the differential treatment appears to be based on a prohibited ground of discrimination supplier, or the supplier refused or failed to offer an alternative reasonable and justifiable explanation for the difference in treatment. Direct Marketing : Direct approach of a person for the direct or indirect purpose of promoting or offering to supply any goods or services to the person, or to request the person to make a donation in the ordinary course of business. Right to Privacy Section 11(1) of the CPA : The right of every person to privacy includes the right to refuse to accept; to require another person to discontinue; or where approach is not in person, to preemptively block, any approach or communication to that person, if the approach or communication is primarily for the purpose of direct marketing. 1. Section 12(1) of the CPA : Supplier must not engage in any direct marketing directed to a consumer for any promotional purpose during a prohibited period, except to the extent that the consumer has expressly or implicitly requested or agreed. 2. Section 12(2) of the CPA : To protect the privacy of consumers, the Minister may prescribe specific days, dates, public holidays or times of days for the purpose of subsection. Section 12 and Regulation 4 prescribe contact time with consumers to not be on Sundays, Public holidays, Saturdays before 9:00 and after 13:00 nor any other day between 20:00 and 8:00 except where consumers expressly or implicitly request or agree to such times. Cooling-off Right of the Consumer Consumers have a cooling-off right, however, direct marketing may reduce the scope of such right. 1. Section 16(1) of the CPA : Not applicable where Section 44 of the ECTA is applicable. 2. Section 16(2) of the CPA : Right is additional to any other right to cancel. 3. Section 16(3) of the CPA : A consumer may rescind a transaction from any direct marketing without reason, by notice to the supplier in writing, within five business days after the transaction was concluded or the goods were delivered to the consumer. 4. Section 16(4) of the CPA : A supplier must return any payment from the consumer within 15 business days after receiving notice of the rescission, if no goods had been delivered to the consumer or receiving from the consumer any goods supplied in terms of the transaction; and must not attempt to collect any payment in terms of a rescinded transaction. Suppliers must not attempt to collect any payment unless it falls under Section 20(6) of the CPA. Section 20(6) of the CPA : No fee if the goods are unopened and in original packaging; however, if in original packaging but has been opened the supplier may charge a reasonable fee for use of goods and may also charge a reasonable fee for repackaging or re-stock of goods; considering the right of consumer to see if goods conform with particular purpose or sample. Section 20(4) of the CPA : A consumer must return goods at the consumer’s risk and expense and where a supplier provides goods in terms of direct marketing, they must inform consumers of Section 16 cooling-off rights. Mosaka v Bryanston Executive Cars CC I. The CPA limits its protection to direct marketing and the supplier must have initiated the approach and such approach must have been directed to the consumer. II. Both parties confirmed that sale was not initiated by the respondent, therefore protection contained in section 16 does not apply. Bundling : When a supplier offers goods and services on condition that they will only be supplied together with other goods and services. Section 13(1) of the CPA : A supplier may not have as a condition that a consumer; must purchase other goods from that supplier; enter into an additional agreement with supplier or a designated third party, or agree to buy specific goods or services from a designated third party. Exceptions to Section 13(1) of the CPA a. Supplier proves convenience outweighs the limitation to a consumer’s choice. b. Supplier proves bundling results in an economic benefit to the consumer. c. Supplier offers bundled goods and services separately and at individual prices as well. Franchise Agreements Section 13(2) of the CPA : The franchisor will have a defence against Section 13 if, goods and services are reasonably related to the branded products or services provided for in the franchise agreements. Pre-authorisation for Repair and Maintenance Services Section 15(1) of the CPA : Applies only to transactions or consumer agreements with a price value above the threshold; and where a service provider repairs, maintains or installs replacement parts of consumer’s property and the service provider takes possession of property for this purpose or consumer requests estimate before repair or maintenance. Section 15(2) of the CPA : Supplier may not charge consumer for repair and maintenance services unless they give the consumer an estimate or quote and the consumer authorises work or the consumer in writing or recorded form declines the giving of an estimate or pre-authorises any charges up to a specified maximum, and the amount charged does not exceed the maximum. Content of an Estimate 1. Breakdown and total amount. 2. Nature and extent of repair and maintenance. 3. Period of validity of the quote. 4. Period within which the consumer must collect the goods and the consequences of non-collection. Section 15(3) of the CPA : The suppliers must not charge a consumer for preparing an estimate including any cost of performing any diagnostic work required in order to prepare an estimate; or any damage to or loss of material or parts in the course of preparing an estimate. Exception to Section 15(3) of the CPA : Unless the supplier has disclosed the price for preparing an estimate before and the consumer has approved it. Section 15(4) of the CPA : The supplier may not charge the consumer a price for goods or services that exceeds the estimate, unless after providing the estimate he or she has informed the consumer of the additional estimated charges; and the consumer has authorised the work to continue. Right to Cancel an Advance Resignation, Booking or Order 1. Section 17(1) of the CPA : Right to cancel an Advance Resignation, Booking or Order does not apply to a franchise agreement, or any special-order goods. 2. Section 17(2) of the CPA : A consumer has the right to cancel any advance booking etc. for any goods or services to be supplied. 3. Section 17(3) of the CPA : Supplier who makes a commitment or accepts a reservation to supply goods or services on a later date may require payment of a reasonable deposit in advance and impose a reasonable charge for cancellation of the order of reservation. 4. Section 17(4) of the CPA : A charge is unreasonable if it exceeds a fair amount, having regard to; the nature of the goods or services that were booked; the length of notice of cancellation provided by the consumer; the reasonable potential for the service provider, to find an alternative consumer; and the general practice of the relevant industry. 5. Section 17(5) of the CPA : No cancellation fee is allowed for bookings cancelled due to the death or hospitalisation of the person for whose benefit the booking was made. KwaZulu-Natal Consumer Protector and Another v Africa Wild Travel CC I. The consumer requested a refund for a Dubai trip cancelled due to COVID19 and the travel agency’s conduct was questioned under Section 17 of the CPA. II. Covid-19 global pandemic falls under force majeure and the effect of force majeure extinguishes obligations owed between the parties and no action for damages for breach of contract are available. III. Consumer entitled to R29 000 refund and AW T’s conduct was prohibited conduct in contravention of section 17 of the CPA. Consumers have a right to receive information in plain and understandable language as protected by section 22 of the Consumer Protection Act and applies to notices, documents, visual representations produced by the supplier. 1. Section 22(1) of the CPA : General requirements for notices, documents, and visual representations must be in a form prescribed by the CPA and must be in plain language. 2. Section 22(2) of the CPA : A document is in plain language if the information is understandable by an ordinary consumer with average literacy and minimal experience. Considerations of Plain Language 1. Context : Relevance and clarity of information. 2. Organisation : Structured presentation of information. 3. Vocabulary : Use of simple and clear language. 4. Aids : Use of illustrations, examples, and headings to aid understanding. Section 22(3) of the CPA : The NCC may publish guidelines or methods of assessment. Disclosure of Reconditional or Grey-market Goods 1. Section 25(1) of the CPA : Reconditioned goods must have a conspicuous notice indicating they are reconditioned, rebuilt, or remade. The notice must comply with plain language in an easily legible size and manner and must be placed where the consumer is likely to see it. 2. Section 25(2) of the CPA : Grey-market goods must have a conspicuous notice in the prescribed manner and form. The supplier must draw consumers' attention to the notice to explain the meaning of it to them in plain language, which also applies to goods that were imported without approval or licence. Sales Record 1. Section 26(1) of the CPA : An entitlement to a sales record is not applicable if section 43 of ECTA applies or transaction exempted in terms of CPA. 2. Section 26(2) of the CPA : Supplier must provide consumer with written record for each transaction with consumer. 3. Section 26(3) of the CPA : Record must include the full name or registered business name and Vat (if applicable) of supplier, the address of premises where goods and services are supplied, the date of transaction, the name or description of goods and services supplied, the unit price of goods and services, the quantity of goods and services to be supplied, the total price of transaction (before tax), the applicable tax amounts and the total price of transaction (including tax). 4. Section 26(4) of the CPA : where persons are trading as hawkers the consumer expressly does not require a sales record. Promote : Includes advertising, displaying, offering goods or services, making representations, or engaging in conduct that could be interpreted as an inducement. Section 29(1) of the CPA : Supplier is prohibited from marketing of goods and services that are false and misleading or misleading, fraudulent and deceptive in any way including in its nature, properties, advantages, uses etc, including the manner and conditions of supply, price, sponsoring of any event or any other material aspect of the goods and services. Bait Marketing : A type of marketing, where a supplier advertises specific goods at a discounted price, aiming to draw consumers to his premises in the hope that once they are there, they will also buy other goods. 1. Section 30(1) of the CPA : Supplier may not advertise goods at a price which misleads or deceives the availability of goods at that price. 2. Section 30(2) of the CPA : There is an exception where the supplier expressly states the limit on availability when marketing. 3. Section 30(3) of the CPA : There is a defence against a contravention claim if the supplier suggests another supplier within reasonable time at the same price and the consumer unreasonably refuses or accepts such a suggestion. Negative Option Marketing, Direct Marketing and Referral Selling Negative Option Marketing : Marketing where the supplier offers goods or services on the basis that the agreement automatically comes into effect unless declined by the consumer. 1. Section 31(1) of the CPA : Prohibits negative option marketing. 2. Section 31(2) of the CPA : An agreement allegedly entered into in this manner is void.  3. Section 31(3) of the CPA : A modification of an agreement through negative option marketing is also void. Section 32(1) of the CPA : A supplier who directly markets their goods and services must inform the consumer, in the prescribed manner of the right to rescind that agreement, as set out in Section 16. Referral Selling : Type of marketing where consumers receive benefits for referring others. Section 38(1) of the CPA : Prohibits referral selling. Section 38(2) of the CPA : A statement by consumer that transaction with supplier was entered into primarily for goods and services and not for rebate, commission, or other benefit,and is not a defence for a supplier guilty of referral selling. Section 38(3) of the CPA : Section does not apply to a franchise agreement. Unconscionable Conduct : Unethical or improper conduct to the extent that it would shock the conscience of a reasonable person. 1. Section 40(1) of the CPA : Supplier or agent may not use physical force, coercion, undue influence, pressure, duress or harassment, unfair tactics or any other similar conduct to market, supply, negotiate, conclude, enforce agreement, collect payment and others from consumers. 2. Section 40(2) of the CPA : It is unconscionable for a supplier to take advantage of the fact that a consumer is unable to protect own interests due to physical or mental disability, illiteracy, ignorance, or any other similar factor. Conduct that falls under sections 40 and 41 is also regarded as prohibited in terms of section 51. Therefore, any transaction or condition that is a result of such prohibited conduct is void. False, Misleading or Deceptive Representations 1. Section 41(1) of the CPA : In relation to marketing of goods and services, a supplier must not imply false, misleading or deceptive representation concerning material fact; use exaggeration, innuendo or ambiguity as to a material fact, fails to disclose a material fact constituting deception and a fails to correct apparent misapprehension by consumer. 2. Section 41(2) of the CPA : Persons acting on behalf of supplier may not falsely represent. 3. Section 41(3) of the CPA : False marketing includes the supplier falsely representing a particular status that they actually do not have, falsely stating or implying that any goods or services are of a particular quality, grade, style or model, falsely stating or implying that goods or services are available or can be delivered or performed within a specified time and falsely stating or implying that goods are new or unused, if they are reconditioned or reclaimed. 4. Section 41(4) of the CPA : A representation about any goods being new is not false if those goods have been used only by or on behalf of the producer; and for the purposes of reasonable testing, service, preparation or delivery. Overselling and Overbooking Section 47(1) of the CPA : Section does not apply to franchise agreements and special order goods. Section 47(2) of the CPA : Supplier may not accept payment if there is no reasonable basis to supply those goods and services, or he or she intends to provide goods and services materially different from those agreed upon and payment was made for. Section 47(3) of the CPA : If supplier commits or accepts reservation to supply goods and services on specific date and time, but cannot because of insufficient stock/capacity, or fails to supply goods and services of a similar or better quality. General Rule : Supplier must refund the consumer amount already paid plus interest plus costs incidental to supplier’s breach. Section 47(4) of the CPA : Defences for an alleged failure are if the supplier arranges with another person to supply same quality goods and services to satisfy consumer’s request and the consumer accepted and the other person actually supplies goods and services or if the supplier arranges with another person but the consumer unreasonably refuses. Section 47(5) of the CPA : Supplier is not liable for costs directly incidental to breach if a shortage of stock due to circumstances beyond supplier’s control and a supplier took reasonable steps to inform the consumer of the shortage of stock. Section 47(6) of the CPA : A shortage of stock is not ‘‘due to circumstances beyond the supplier’s control’’ if the shortage results directly or indirectly from a failure by the supplier to adequately carry out any ordinary duty pertaining to their business. Lay-by Agreements Section 62(1) of the CPA : Lay-by is an agreement whereby a supplier agrees to sell specific goods to a consumer, but accepting payment in periodic instalments with no interest added, and holding the goods until the full price is paid. Each amount paid remains the property of the consumer, until the goods have been delivered to them and the goods remain at the risk of the supplier until the goods have been delivered to the consumer. Section 62(2) of the CPA : If supplier is unable to deliver goods when the consumer has paid the full price, the supplier must either, at the option of the consumer supply consumer with equivalent quantity goods of equal or superior design and quality; or refund the consumer through money paid plus interest if inability to supply goods was due to circumstances beyond supplier’s control; or double the amount paid by consumer as compensation for breach if supplier is at fault. Section 62(3) of the CPA : Circumstances beyond suppliers control” is not a defence if the shortage of goods is due to supplier not carrying out business adequately. Section 62(4) of the CPA : If consumer cancels the agreement before paying the last instalment or, does not complete payment for the goods on lay-by within 60 business days after date as agreed upon the supplier may charge a reasonable termination penalty of maximum one percent of the full purchase price and must refund the rest to consumer. Section 62(5) of the CPA : Termination penalty may not be charged if the consumer’s failure to complete payment was due to the death or hospitalisation of consumer; or unless the supplier informed the consumer of the fact and extent of the penalty before the consumer entered into the lay-by agreement, however, this is difficult to prove by the supplier unless included in the written agreement and signed by the consumer as proof. Franchise Agreements Franchise Agreement : A legal contract where a well established business (franchisor) consents to provide its brand, operational model and required support to another party (franchisee) for them to run a similar business in exchange for a fee and some share of the income generated.  1. Section 7(1) of the CPA : Agreement must be in writing, signed by or on the behalf of the franchisee, in plain and understandable language and must contain the minimum prescribed information. 2. Section 7(2) of the CPA : A franchisee may cancel without cost or penalty within 10 business days after signing, by giving written notice to the franchisor. There are two important stages in which franchisor must provide certain information in a certain way within a certain time to the franchisee. Stage One : Pre-disclosure Documentation and Information Regulation 3 : Franchisor must disclose document 14 days before signing of franchise agreement and the document must include the number of outlets; growth of turnover, net profit of individual outlets, no material changes in franchisor’s financial position, written projections of potential sales, income, profits and other finances and certification by a financial officer or auditor certifying certain information regarding the financial position of the franchisor, and information of the existing franchisees. Stage Two : Content Requirements for Franchise Agreements Regulation 2 : every franchise agreement must contain Section 7(2) of the Act at the top of the first page of the franchise agreement, a clause informing a franchisor that they are entitled to any undisclosed direct or indirect benefit or compensation from suppliers, unless disclosed in writing; the name and description of the types of goods or services which the franchisee is entitled to provide, the obligations of the franchisor; the obligations of the franchisee; a description of the applicable franchise business system; the direct or indirect consideration payable by the franchisee to the franchisor. A franchise agreement that is renewed after the general effective date constitutes a new franchise agreement. Section 69 of the CPA : The hierarchy for redress follows at first direct referral to the NCT, then to an Ombud with jurisdiction, then to an Accredited Industry Ombud, provincial consumer court, ADR Agent or NCC complaint and as a last resort by approaching the normal courts. Normal courts are the last option to keep consumer disputes out of court and solve them with alternative dispute mechanisms, however, in practice this may be problematic as the other routes of redress listed in section 69 are not effective or not implemented properly. Chirwa v Transnet Ltd and Others I. Where a specialised framework has been created for the resolution of disputes, parties must pursue their claims primarily through such mechanisms. II. Generally, the CPA appears to endorse the approach that an ADR Agent or consumer court or the NCC or, where appropriate, the Tribunal, be approached before a civil court can be approached by a person with locus standi, however, section 69(d) can reasonably be construed to have more than one meaning, thus rendering it susceptible to the interpretative aid contained in section 4(3). National Consumer Commission The NCC is the primary institution that enforces CPA, and is seen as the “appeal institution” unless a direct referral is made and is an independent juristic person. The NCC was established in terms of CPA and only has jurisdiction over consumer matters, however, the NCT established in terms of the NCA has jurisdiction over both credit agreements in terms of NCA as well as consumer agreements in terms of CPA. The NCC consists of the National Consumer Commissioner, Inspectors and Support Staff. Section 4(1) of the CPA : The persons who may approach a court are as follows: a. A person acting on his or her own behalf b. An authorised person acting on behalf of another person who cannot act in his or her own name c. A person acting as a member of, or in the interest of, a group or class of affected persons d. A person acting in the public interest (with leave of the Tribunal or court) e. An association acting in the interests of its members Duties and Obligations of the NCC Section 72 of the CPA : When it receives a complaint, it may issue notice of non-referral if the claim is frivolous, vexatious, does not allege any facts or is prevented from being referred to in terms of section 116 of the CPA. - Refer complaint to an ADR agent, Provincial Consumer Protection Authority or Court, refer to NCC inspector in order to investigate or refer the complaint to another regulatory authority with jurisdiction over the matter for investigation. - Direct an inspector to investigate the complaint as quickly as practicable. Section 73 of the CPA : After concluding investigation, NCC may issue notice of non-referral; or in event of offence, refer to NPA; or in the event of prohibited conduct, refer to equality court if prohibited conduct falls under Part A or refer to NCT or suggest a draft consent order; or issue a compliance notice. National Consumer Tribunal NCT must conduct a quick, inquisitorial, informal, and in accordance with rules of natural justice, hearing, thereafter it may make an appropriate order such as granting temporary relief, declaring conduct that is prohibited conduct, issue an interdict, impose administrative fines, confirm a consent order or condone non-compliance of NCT rules. Non-compliance with NCT order: The person will be guilty of offence with a fine and/or 10 years imprisonment. Appeal against NCT decision is done through a referral to a full panel of the Tribunal. ADR Agents Section 70 of the CPA : Consumer may resolve any dispute relating to a transaction or agreement with a supplier by referring the matter to an alternative dispute resolution agent. An ADR Agent may be an ombud with jurisdiction, an industry ombud accredited in terms of section 82(6), a person or entity providing conciliation or mediation services to assist in the resolution of consumer disputes, other than an ombud with jurisdiction, or an accredited industry ombud to consumers. 1. Motor Industry Ombud of South Africa (MOISA) 2. Arbitration Foundation of South Africa (AFSA) Proceedings : ADR agents resolving disputes may record resolution of dispute in the form of an order; and if parties agree, submit to the NCT or Court to be made a consent order, however, if ADR agent cannot resolve dispute then they may terminate process by way of notice to the parties; whereafter the party who filed the complaint may refer to NCC. Other Sections of the CPA Normal Court Powers : Normally, may only be approached as last option in terms of Section 69 of CPA, however, in the case of fair and just contract terms and conditions and unconscionable conduct normal courts will have jurisdiction and may be approached first. Section 116 of the CPA : A complaint may not be referred or made to the Tribunal or a consumer court if the complaint has prescribed after 3 years and similar facts and the same respondent were already served before the NCT. Section 117 of the CPA : In any proceedings before the Tribunal, or a consumer court the standard of proof is on a balance of probabilities. Section 112(2) of the CPA : An administrative fine imposed may not exceed the greater of 10% of the respondent’s annual turnover during the preceding financial year; or R1 000 000. Case Law surrounding the Hierarchy of Referral Imperial Group v DIPICO 2016 (NCNC) I. CPA must be interpreted in alignment with its purpose (S3) and the Constitution (S34), and only one option is listed in S69. II. Consumers can approach any of the ADR forums if this was not the intention of legislation it would have been expressed as in terms of Section 70. III. Although consumers can approach any of the ADR forums, it is not desirable to “shop” for forums. Ideally, disputes should be finalised within the chosen forum. Joroy v Potgieter I. Last resort is to use the courts as civil courts have jurisdiction but only after all avenues have been exhausted. Imperial v MEC I. Confirmation of Chirwa, where a specialised framework for resolution of disputes has been established, parties must pursue claims primarily through such mechanisms. Motus Corporation v Wentzel I. Section 69(d) should not lightly be read as excluding the right of consumers to approach the court in order to obtain redress, especially common law remedies that courts have always had jurisdiction. II. There is no clear hierarchy as had that been the aim it would have been clearly set out and not implied and Section 69 refers to consumers pursuing all other remedies to other consumer protection legislation. First Engineering 2022 I. Taking away the right of the consumer to enforce rights directly would not be fair. II. The case followed in Motus and distinguished between enforcement of a right in the CPA and enforcement of common law right, of which the latter cannot be deprived of the right to approach court.