CPA Exam Notes PDF

1 Pass and Prosper CPA: 2-11 Study Unit 2: Introduction and background to consumer protection law Historical Overview Aspects ❖ Industrial Revolution took place in 18th to 19th century ❖ Resulted in:...

1 Pass and Prosper CPA: 2-11 Study Unit 2: Introduction and background to consumer protection law Historical Overview Aspects ❖ Industrial Revolution took place in 18th to 19th century ❖ Resulted in: Mass production Sustained rise in average income & buying power Improved infrastructure and communication methods ❖ Consumer protection regulation can be traced back to 20th century. ❖ As a direct result of mass production brought by industrial revolution. Massification of the Consumer Market ❖ Goods became more complex, ❖ Therefore was difficult for consumers to evaluate basic features of the transaction. ❖ Mass distribution led to new marketing and advertising techniques. ❖ Goal of this was profit maximisation Molony Committee (NB) ❖ Identified additional challenges faced by consumers: Goods getting more complex Consumers vulnerable Reluctance to pursue legitimate claims Insufficient organised consumer organisations Inadequate law enforcement Impact of Overview (Just for Understanding) constitution ❖ Consumer protection measures can be considered as protecting right to dignity (s10 Constitution) ❖ New constitutional dispensation and introduction of democracy heralded new beginnings for areas of private law: Family law, Property law, Law of delict ❖ But constitutional justice remains slow within law of contract and consumer law. ❖ Because of contrasting ideas: Classical model and theory: Party autonomy, freedom of contract, minimal supervision, pacta sunt servanda. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  2 Pass and Prosper Neo-liberalism and fairness approach: Rectification of unequal bargaining power, introduction of consumer protection legislation. ❖ Even after introduction of Constitution SA courts continued to apply classical model approach. Procedural Overview (Procedural Fairness) fairness VS ❖ Setting the scene for conclusion of contract in Substantive circumstances that are fair. fairness ❖ Promotes transparency ❖ Attempts to balance interest of both parties (consumer & supplier) ❖ Examples in CPA: Information obligations Prohibiting unconscionable conduct Prohibiting false, misleading or deceptive misrepresentations, fraudulent offers and pyramid schemes Overview (Substantive Fairness) ❖ It is a person orientated approach ❖ How the physical, property, social and economic interests of consumers will be affected by the terms of the agreements they conclude ❖ Fairness and Unfairness ❖ Advances social and economic justice ❖ Examples in CPA: Part G: Right to fair, just & reasonable t’s & c’s; Absolutely prohibited t’s & c’s (Blacklisted terms); ❖ T’s & c’s presumed to be unfair (Grey-listed terms) Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  3 Pass and Prosper Study Unit 3: Application of the CPA General ❖ Overview Introduction ❖ The CPA is a comprehensive piece of legislation in terms of which consumer protection in South Africa is regulated. ❖ Repealed Acts or parts(not NB) Ss 2 to 13 and 14 and 16 of the Merchandise Marks Act 17 of 1941, Business Names Act 27 of 1960, Price Control Act 25 of 1964, Sales and Service Matters Act 25 of 1964, Trade Practices Act 76 of 1976, Consumer Affairs (Unfair Business Practices) Act 71 of 1988 and S54 of the Lotteries Act 57 of 1997. ❖ The Act does not apply to the promotion of any goods or services before the general effective date (31 March 2011) and ❖ Also, not to any transaction or agreement entered into or any goods or services supplied to a consumer before general effective date. Definitions Definitions ❖ Definitions are provided just for understanding. ❖ S(1) of the CPA: ❖ Agreement- an arrangement between two or more parties to establish a relationship in law between them. ❖ Business days- the number of days calculated excluding any public holiday, Saturday or Sunday. ❖ Consideration- refers to anything of value given and accepted in exchange for goods or services, including (a) money, property, a cheque or other negotiable instrument, a token, a ticket, electronic credit, credit, debit or electronic chip or similar object; (b) labour, barter or other goods or services; (c) loyalty credit or award, coupon or other right to assert a claim; or (d) any other thing, undertaking, promise, agreement or assurance ❖ Consumer- in respect of any particular goods or services, means - (a) a person to whom those goods or services are marketed in the ordinary course of the supplier’s business; (b) a person who has entered into a transaction with a supplier in the ordinary course of the supplier’s Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  4 Pass and Prosper business, unless the transaction is exempt from the application of this Act (c) if the context so requires/permits, a user of those goods or a recipient/beneficiary of those particular services, irrespective of whether that user, recipient or beneficiary was a party to a transaction concerning the supply of those particular goods or services; and (d) a franchisee in terms of a franchise agreement ❖ Consumer agreement- agreement between a supplier and a consumer other than a franchise agreement ❖ Supplier- a person who markets any goods or services ❖ Electronic communication- communication by means of electronic transmission, including by telephone, fax, sms, wireless computer access, email or any similar technology or device; ❖ Market- to promote or supply any goods or services ❖ Goods- include (a) anything marketed for human consumption; (b) any tangible object excluding any medium on which anything is or may be written; (c) any intellectual property or other intangible product written on any medium, or a licence to use any such intangible product; (d) a legal interest in land or other immovable property, other than an interest that falls within the definition of ‘service’ in this section; and (e) gas, water and electricity; ❖ Juristic person includes (a) a body corporate; (b) a partnership or association; or (c) a trust as defined in the Trust Property Act, Purpose of the ❖ Purpose of the CPA Act ❖ S3 of the CPA: ❖ Is to promote and advance the social and economic welfare of consumers in SA by (a) Establishing a legal framework for the achievement of a fair and responsible consumer market. (b) Reducing any disadvantages against the vulnerable consumer. (c) Promoting fair business practices; (d) Protecting consumers from unconscionable, unfair, or improper trade practices; and deceptive or fraudulent conduct; (e) Improving consumer awareness and information; Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  5 Pass and Prosper (f) Promoting consumer confidence and the development of consumer responsibility, (g) Providing for a consistent and efficient system of consensual resolution of disputes arising from consumer transactions; and (h) Providing for an accessible, consistent, harmonised and effective system of redress for consumers. (NCC) ❖ Vulnerable consumer group ❖ S3(1)(b) of the CPA: ❖ The vulnerable consumer group includes: (i) low-income persons (ii)people living in remote, isolated or low-density population areas; (iii) minors, seniors or other similarly vulnerable consumers; (iv) 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 ❖ Fundamental consumer rights consumer rights ❖ Act protects eight fundamental consumer rights, namely: protected by the (a) right of equality in the consumer market. Act (b) right to privacy; (c) right to choose; (d) right to disclosure and information; (e) right to fair and responsible marketing; (f) right to fair and honest dealing; (g) right to fair, just and reasonable terms and conditions; and (h) right to fair value, good quality and safety. ❖ Locus Standi ❖ S 4(1) of the CPA: ❖ Following persons may approach a court, NCC or NCT, alleging that a consumer’s rights has been infringed: (a)Person acting on own behalf (b)Authorised acting on behalf of another (c)As a member of a group / class of affected persons (d)Acting in the public interest (e)Association on behalf of members ❖ The following persons have locus standi. ❖ Interpretation of the Act ❖ S2(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. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  6 Pass and Prosper ❖ Examples of warranties in terms of common law: Right to delivery Right to warranty against latent defects Right to warranty against eviction Application of ❖ Application of the ACT the Act ❖ S5 of the CPA: a) every transaction occurring within the Republic (unless expressly excluded), b) the promotion or supply of goods and services in Republic unless: i. goods or services could not reasonably be the subject of transaction to which the Act applies; or ii. the goods or services exempted (in terms of section 5(3) or (4)); c) goods or services supplied where the Act applies, irrespective of whether those goods or services are supplied together or separate with any other goods, d) goods that are supplied where the Act does not apply but only to the extent provided for in subsection (5). ❖ Following arrangements must be regarded as a transaction ❖ S5(6) of the CPA: a) 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; b) a solicitation of offers to enter into a franchise agreement; c) offer by a potential franchisor to enter into a franchise agreement with a potential franchisee; d) a franchise agreement or an agreement supplementary to a franchise agreement; and e) the supply of any goods or services to a franchisee in terms of a franchise agreement. ❖ EXCLUSIONS ❖ S5(2) of the CPA: ❖ Act does not apply to any transaction where: a) State is a consumer b) 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). c) Transaction constitutes a credit agreement under the NCA. Here, NCA will apply to credit agreement whereas Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  7 Pass and Prosper CPA will apply to agreement concerning the goods/services themselves. d) Services in terms of employment contract. e) Collective bargaining agreement or collective agreement. ❖ Doyle v Killeen & Others (NB) ❖ Held: ❖ An objective test must be used and further determined the factors taken into account by NCT to determine whether the CPA applies to a scenario: 1. Whether the person has a registered business 2. The nature of the business that the person engages in 3. The nature of the goods normally sold by the person. 4. The frequency with which the goods are sold by the person 5. Whether the person advertises or markets his goods on a frequent or ongoing basis ❖ Eskom Holdings Ltd v Halstead-Cleak(NB) ❖ Held: ❖ A consumer to supplier relationship had to be present for the CPA to apply. ❖ In this case the respondent was held not be a consumer as he had not entered into transaction with Eskom as supplier/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. ❖ Essentially, the goods or services at question must’ve been supplied in the supplier’s ordinary course of business for CPA to apply. Inconsistencies ❖ Inconsistencies with other ❖ S2(8) of the CPA: legislation ❖ If an 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. ❖ S2(9) further prescribes that: ❖ 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. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  8 Pass and Prosper ❖ S4(3) of the CPA: ❖ If a provision has more than one meaning: The NCT/court must prefer the meaning which best promotes the spirit and purpose of CPA. In particular vulnerable consumers. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  9 Pass and Prosper Study Unit 4: Right to equality Right to equality ❖ Overview in the consumer ❖ Consumers have a right to equality. market ❖ Discriminatory conduct ❖ S8(1) of the CPA: ❖ A supplier may not unfairly: a) exclude any person or category of persons from accessing any goods or services offered by the supplier; b) grant any person or category of persons exclusive access to any goods or services offered by the supplier; c) assign priority of supply of any goods or services offered by the supplier to any person or category of persons; d) supply a different quality of goods or services to any person or category of persons; e) charge different prices for any goods or services to any persons or category of persons; f) target particular communities, districts, populations or market segments for exclusive, priority or preferential supply of any goods or services; or g) exclude a particular community, district, population or market segment from the supply of any goods or services offered by the supplier ❖ on the basis of one or more grounds of unfair discrimination contemplated in S(9) of the Constitution or Chapter 2 of the Promotion of Equality and Prevention of Unfair Discrimination Act. ❖ Protection against discriminatory conduct ❖ S8(2) of the CPA: ❖ Supplier may not treat a person/group differently in a manner that amounts to unfair discrimination on grounds set out in S9 of the Constitutions / Chap 2 Equality Act when the supplier does the following: a) Assessing ability to meet obligations b) Deciding whether to enter into a transaction c) Determining aspects of costs d) Interacting with consumer at place of business or in the course of display of g & s e) Selecting ,preparing, packaging of goods f) Proposing & agreeing on t’s & c’s g) Assessing or requiring compliance h) Exercising right as supplier Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  10 Pass and Prosper i) Determining whether or not to continue with agreement etc j) In the reporting of personal info ❖ The above also applies when consumer that is an association/juristic person, to prohibit unfair discrimination against them. [S8(3)] ❖ Powers of the courts ❖ S8(4) of the CPA: ❖ Nothing prohibits the courts authority to: a) Consider conduct between a supplier and a consumer not contemplated in section 8; or b) Find any such conduct to be unfair discrimination within the meaning of Constitution and Equality Act Reasonable ❖ Overview grounds for ❖ A supplier may exclude a consumer/group based on the differential following reasonable grounds. treatment ❖ Reasonable grounds for discriminatory conduct ❖ S9(1) of the CPA: (NB) ❖ It is not a contravention of S8 for a supplier to: a) Refuse to provide goods or services to a minor or request reasonable consent from the parent or guardian of unemancipated minor; i. in accordance with any public regulation; or ii. as a reasonable precaution to protect the health, welfare or safety of a minor; b) Refuse on reasonable grounds to i. enter into an agreement with a minor; or ii. 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: i. minors generally; ii. minors who are above or below a specified age, or between specified ages; iii. adults who have attained a specified age of at least 60 years; or d) Advertise, or supply, any goods or services at a discounted price solely on the basis that the consumer: i. is a minor who has not yet attained a specified age; or ii. is an adult who has attained a specified age of at least 60 years. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  11 Pass and Prosper ❖ Discrimination on the basis of gender: ❖ S9(2) of the CPA: (NB) ❖ A supplier may: a) Provide separate facilities for the exclusive use of persons of each gender; or b) Offer to supply or provide access to a facility exclusively to persons of one gender. ❖ Discrimination for exclusive groups: ❖ S9(3) of the CPA: (NB) ❖ 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. ❖ Powers of the courts ❖ S9(4) of the CPA: ❖ Nothing prohibits the courts authority to: a) Consider the reasonableness of conduct and whether the unreasonable conduct is unfair in terms of the Constitution or Equality Act; or b) Determine whether the conduct contemplated in S9 was fair in the transaction or marketing of goods of services. Jurisdiction of ❖ Overview the Equality ❖ Any consumer whose right to equality has been contravened Court may approach the Equality Court. ❖ The EC only has jurisdiction over matters relating to Part A of the CPA. ❖ Remedial action ❖ S10(1) of the CPA: ❖ With an alleged contravention a consumer may either: a) institute proceedings before an equality court; or b) file a complaint with the Commission, which must refer the complaint to the equality court, if the complaint appears to be valid. Court proceedings ❖ S10(2) of the CPA: ❖ In any proceedings contemplated in this section; a) Always a presumption of unfair discrimination with any differential treatment, unless it is established that the discrimination is fair; b) Court may draw an inference that a supplier has discriminated unfairly if, Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  12 Pass and Prosper i.supplier has done anything in S8 which constituted differential treatment in comparison to another consumer; ii. the differential treatment appears to be based on a prohibited ground of discrimination; iii. supplier, refused/failed to offer an alternative reasonable and justifiable explanation for the difference in treatment. ❖ NB: Always a presumption of unfair discrimination and onus bears on supplier to prove fairness. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  13 Pass and Prosper Study Unit 5: Right to Privacy, Direct Marketing and Cooling-off Right Right to privacy ❖ Overview in the consumer ❖ Direct marketing refers to approaching a person, either in market person or by mail or electronic communication, for the direct/indirect purpose of; a) promoting or offering to supply, in the ordinary course of business, any goods or services to the person; or b) requesting the person to make a donation of any kind for any reason; ❖ This definition is prescribed in S1 of the CPA. ❖ Right to privacy ❖ S11(1) of the CPA: ❖ The right of every person to privacy includes the right to; a) refuse to accept; b) require another person to discontinue; or c) where approach is not in person, to pre-emptively block, any approach or communication to that person, if the approach or communication is primarily for the purpose of direct marketing. ❖ Regulation of time for contacting consumers ❖ S12 of the CPA: ❖ (1) 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) 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 & Reg 4 prescribe contact time with consumers: NOT: Sundays or public holidays NOT: Saturdays before 9:00 and after 13:00 NOT: any other day between 20:00 and 8:00 except: where consumer expressly or implicitly requested or agreed Consumer’s ❖ Overview cooling-off right ❖ Consumers have a cooling-off right. ❖ Direct marketing, reduces the scope of cooling-off right ❖ Cooling-off right ❖ S16 of the CPA: (NB) ❖ (1) Not applicable where S44 ECTA is applicable ❖ (2) Right is additional to any other right to cancel ❖ (3) ) A consumer may rescind a transaction from any direct marketing without reason, by notice to the supplier in writing, within five business days after (a) the transaction was concluded; or Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  14 Pass and Prosper (b) the goods that of the transaction were delivered to the consumer. ❖ Effect of enforcing cooling-off right ❖ S16(4) of the CPA: (NB) ❖ A supplier must ❖ (a)return any payment from 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; ❖ (b)not attempt to collect any payment in terms of a rescinded transaction. ❖ EXCEPTIONS: ❖ Supplier must not attempt to collect any payment unless it falls under S20(6) ❖ When supplier may charge fee on goods returned ❖ S20(6) of the CPA: (NB) ❖ (a) No fee if goods are unopened and in original packaging; ❖ (b) If in original packaging but has been opened (i)Supplier may charge a reasonable fee for use of goods ❖ (c) Supplier 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. ❖ S20(4) of the CPA: ❖ A consumer must return goods at the consumer’s risk & expense. ❖ Where a supplier provides goods in terms of direct marketing, they must inform consumer of S16 cooling-off right. ❖ Mosaka v Bryanston Executive Cars CC (NB) ❖ FACTS ❖ Mosaka bought second-hand BMW 523i (2010) from the respondent on 24 August 2018 ❖ He conducted an inspection of the vehicle prior to purchase and signed the defects disclosure document prepared by the respondent ❖ 28 August 2018 – He attempted to return vehicle following vehicle inspection he requested at DEKRA ❖ DEKRA report reflected various faults in the vehicle ❖ Mosaka expected a refund of the purchase price but Bryanston Executive Cars refused to accept the cancellation of the purchase. ❖ LEGAL QUESTION ❖ Can Mosaka rely on the section 16 cooling off right? Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  15 Pass and Prosper ❖ FINDING ❖ CPA limits its protection to direct marketing ❖ Supplier must have initiated the approach and such approach must have been directed to the consumer ❖ Both parties confirmed that sale was not initiated by the respondent. ❖ Therefore protection contained in section 16 does not apply. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  16 Pass and Prosper Study Unit 6: Right to Choice Right to Choice ❖ Overview ❖ Consumers have a right to choose. ❖ Bundling- when a supplier offers goods and services on condition that they will only be supplied together with other goods and services. ❖ Protection of right to choice ❖ S13(1) of the CPA: ❖ A supplier may not have as a condition, that a consumer; (a) Must purchase other goods from that supplier; (b) Enter into an additional agreement with supplier/ designated third party: or (c) Agree to buy specific goods or services from a designated third party ❖ EXCEPTIONS: ❖ Unless the supplier can show that: (i) convenience outweighs the limitation to consumer’s right of choice (ii) bundling results in economic benefit for consumer; OR (iii) offers bundled goods and services separately and at individual prices as well ❖ Franchise Agreements ❖ S13(2) of the CPA ❖ The franchisor will have a defence against S13 if, ❖ Goods and services are reasonably related to the branded products or services provided for in the franchise agreements. Pre- ❖ Overview authorisation for ❖ S15 of the Act protects pre-authorisation for repair & Repair & maintenance services. Maintenance ❖ Applicability Services ❖ S15(1) of the CPA ❖ Applies only to transactions/consumer agreements ❖ (a) with a price value above the threshold; AND ❖ (b) Where a service provider repairs, maintains or installs replacement parts of consumer’s property and (i) the service provider takes possession of property for this purpose OR (ii)consumer requests estimate BEFORE repair or maintenance. Charging for repair services ❖ S15(2) of the CPA (NB) ❖ SP may not charge consumer for repair & maintenance services unless: Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  17 Pass and Prosper ❖ (a) They give the consumer an estimate or quote and the consumer authorises work OR ❖ (b) Consumer in writing/other recorded form (i)declines the giving of an estimate OR (ii) pre-authorises any charges up to a specified maximum, and amount charged does not exceed that maximum. ❖ Content of the estimate: o Breakdown and total amount o Nature and extent of repair and maintenance o Period of validity of quote o Period within which the consumer must collect the goods (and consequences of non-collection) ❖ Estimation document ❖ S15(3) of the CPA: (NB) ❖ SP must not charge a consumer for preparing an estimate including; (a) any cost of performing any diagnostic work required in order to prepare an estimate; or (b) any damage to or loss of material or parts in the course of preparing an estimate, ❖ EXCEPTION: ❖ Unless the SP has disclosed the price for preparing an estimate before and consumer approved it. ❖ S15(4) of the CPA: ❖ SP may not charge the consumer a price for goods or services, that exceeds the estimate, unless after providing the estimate: (a) SP has informed the consumer of the additional estimated charges; and (b) the consumer has authorised the work to continue. Right to cancel ❖ Overview advance ❖ S17 of the Act pertains to a consumer’s right to cancel reservation, advance reservation, booking or order. booking or order ❖ Applicability ❖ S17(1) of the CPA: ❖ Right does not apply to a franchise agreement, or any special-order goods. ❖ Right to cancel ❖ S17(2) of the CPA: ❖ A consumer has the right to cancel any advance booking etc. for any goods or services to be supplied. ❖ S17(3) of the CPA: Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  18 Pass and Prosper ❖ Supplier who makes a commitment/accepts a reservation to supply goods or services on a later date may (a) require payment of a reasonable deposit in advance; and (b) impose a reasonable charge for cancellation of the order or reservation. ❖ Unreasonable cancellation fee ❖ S17(4) of the CPA: (NB) ❖ A charge is unreasonable if it exceeds a fair amount, having regard to; (a) the nature of the goods or services that were booked; (b) the length of notice of cancellation provided by the consumer; (c)reasonable potential for the service provider, to find an alternative consumer; and (d) the general practice of the relevant industry. ❖ EXCEPTION TO CANCELLATION FEE ❖ S17(5) of CPA: (NB) ❖ No cancellation fee is allowed for bookings cancelled due to death or hospitalization, ❖ Of the person for whose benefit the booking was made. ❖ KwaZulu-Natal Consumer Protector and Another v Africa Wild Travel CC (NB) ❖ Facts: ❖ The consumer requested a refund for a Dubai trip cancelled due to COVID19. The travel agency’s conduct was questioned under Section 17 of the CPA ❖ Legal Question: ❖ Whether conduct of AWT is prohibited conduct in contravention of section 17 of the CPA? ❖ Finding: ❖ Covid-19 global pandemic falls under force majeure. ❖ Effect of force majeure extinguishes obligations owed between the parties and no action for damages for breach of contract is available. ❖ Consumer entitled to R29 000 refund. ❖ AWT’s conduct was prohibited conduct in contravention of section 17. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  19 Pass and Prosper Study Unit 7: Right to Info and Disclosure Right to ❖ Overview Information in ❖ Consumers have a right to receive information in plain and Plain and understandable language. Understandable ❖ S22 protects the right to information in plain and Language understandable language. ❖ Applies to any notice, document, visual representation, produced by supplier ❖ This notice must comply with general reqs. In S22(1). ❖ General requirements ❖ S22(1) of the CPA ❖ Must be in the form prescribed by (CPA or other legislation) OR; ❖ Must be in plain language ❖ Plain language explained ❖ S22(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 for plain language: (a) Context: Relevance and clarity of information. (b) Organization: Structured presentation of information. (c) Vocabulary: Use of simple and clear language (d) Aids: Use of illustrations, examples, and headings to aid understanding. ❖ S22(3) of the CPA ❖ NCC may publish guidelines / methods of assessment. Disclosure of ❖ Overview reconditioned or ❖ Reconditioned goods- S25(1) of the CPA (NB) grey market ❖ Reconditioned goods must have: goods ❖ A conspicuous notice indicating they are reconditioned, rebuilt, or remade. ❖ The notice must comply with plain language in an easily legible size and manner. ❖ Be placed where the consumer is likely to see it. ❖ Grey-market goods-S25(2) of the CPA (NB) ❖ Grey-market goods must have: ❖ A conspicuous notice in the prescribed manner and form. ❖ Supplier must draw consumers attention to notice to explain the meaning of it to them in plain language. ❖ Also applies to goods that were imported without approval or license. Sales Record ❖ Overview Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  20 Pass and Prosper ❖ Consumers are entitled to a sales record. ❖ Applicability ❖ S26(1) of the CPA ❖ Not applicable if s43 of ECTA applies or transaction exempted in terms of CPA. ❖ General rule ❖ S26(2) of the CPA ❖ Supplier must provide consumer with written record for each transaction with consumer. ❖ Content of sales record ❖ S26(3) of the CPA ❖ Record must include the following minimum info: (a)Full name or registered business name and Vat (if applicable) of supplier (b)Address of premises where goods and services are supplied (c)Date of transaction (d)Name or description of goods and services supplied (e)Unit price of goods and services (f)Quantity of goods and services to be supplied (g)Total price of transaction (before tax)] (h)Applicable tax amounts (i)Total price of transaction (including tax) ❖ Exemption: ❖ S26(4) of the CPA ❖ Persons trading as hawkers ❖ Where consumer expressly does not require sales record. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  21 Pass and Prosper Study Unit 8: Right to Fair and Responsible Marketing Right to fair and ❖ Overview responsible ❖ Market: To promote or supply goods or services. marketing ❖ Promote: Includes advertising, displaying, offering goods or services, making representations, or engaging in conduct that could be interpreted as an inducement. ❖ S29 of the CPA regulates the general standards for marketing of goods & services. ❖ Right to fair and responsible marketing ❖ S29(1) of the CPA: ❖ Supplier is prohibited from marketing of goods & services: (a)That is false & misleading (b) Misleading, fraudulent & deceptive in any way (i) Including nature, properties, advantages, uses etc. (ii) Including manner & conditions of supply (iii)Including price (iv) Sponsoring of any event or (v) Any other material aspect of the goods & services. Bait Marketing ❖ Overview ❖ 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. ❖ Right to fair and responsible marketing ❖ S30(1) of the CPA: ❖ Supplier may not advertise goods at a price which misleads/deceives the availability of goods at that price. ❖ EXCEPTIONS: ❖ S30(2) of the CPA: ❖ If supplier expressly states the limit on availability when marketing. ❖ Suppliers defence: ❖ S30(3) of the CPA: ❖ Defence against a contravention claim: ❖ If they suggest another supplier within reasonable time at same price and ❖ Consumer unreasonably refused or accepted Negative option ❖ Overview marketing ❖ Negative option marketing- marketing where supplier offers goods or services on the basis that the agreement automatically comes into effect unless declined by the consumer. ❖ Protection ❖ S31(1) of the CPA Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  22 Pass and Prosper ❖Prohibits negative option marketing. ❖S31(2) of the CPA: ❖An agreement allegedly entered into in this manner is void. ❖S31(3) of the CPA: ❖A modification of an agreement through negative option marketing is also void. Direct Marketing ❖ Effect of direct marketing ❖ S32(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 S16. Referral selling ❖ Overview ❖ Type of marketing where consumers receive benefits for referring others. ❖ Protection ❖ S38(1) of the CPA ❖ Prohibits referral selling ❖ S38(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, ❖ Is not a defence for a supplier guilty of referral selling. ❖ Applicability ❖ S38(3) of the CPA ❖ Section does not apply to a franchise agreement. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  23 Pass and Prosper Study Unit 9: Right to fair and honest dealing Unconscionable ❖ Overview conduct ❖ Unconscionable- unethical/improper conduct to the extent that it would shock the conscience of a reasonable person. ❖ S40 of the Act protects consumers from unconscionable conduct. ❖ Protection against unconscionable conduct ❖ S40(1) of the CPA: ❖ Supplier/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 etc. from a consumers ❖ Examples of unconscionable conduct ❖ S40(2) of the CPA: ❖ It is unconscionable for supplier to: take advantage of the fact that consumer unable to protect own interests due to physical/mental disability, illiteracy, ignorance, or any other similar factor. ❖ Conduct that falls under ss 40/41 is also regarded as prohibited in terms of section 51. ❖ Therefore, any transaction/condition etc. that is a result of such prohibited conduct is VOID. False, ❖ Overview misleading or ❖ S41 of the Act protects consumers from false deceptive representations. representations ❖ Protection against false representations ❖ S41(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 Fail to disclose a material fact (failure = deception) Fail to correct apparent misapprehension by consumer ❖ S41(2) of the CPA ❖ Persons acting on behalf of supplier also may not falsely represent. ❖ Examples of false marketing ❖ S41(3) of the CPA Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  24 Pass and Prosper ❖ Supplier falsely representing a particular status that they actually do not have. ❖ Falsely stating/implying that any goods or services are of a particular quality, grade, style or model. ❖ Falsely stating/implying that goods or services are available or can be delivered/performed within a specified time. ❖ Falsely stating/implying that goods are new or unused, if they are reconditioned or reclaimed. ❖ EXCEPTION: ❖ S41(4) of the CPA (NB) ❖ A representation about any goods being new is not false if those goods have been used only (a) by or on behalf of the producer; and (b) for the purposes of reasonable testing, service, preparation or delivery. Overselling and ❖ Applicability overbooking ❖ S47(1) of the CPA ❖ Section does not apply to: franchise agreements and special order goods ❖ No payment if ❖ S47(2) of the CPA (NB) ❖ Supplier may not accept payment if: ❖ No reasonable basis to supply those goods & services, or ❖ Intends to provide goods & services materially different from those agreed upon and payment was made for. ❖ Failure to provide goods and services ❖ S47(3) of the CPA (NB) ❖ If supplier commits/accepts reservation to supply goods & services on specific date & time, ❖ But cannot because of insufficient stock/capacity, or ❖ Fails to supply goods & services of a similar or better quality. ❖ GR: Supplier MUST Refund consumer amount already paid Plus interest Plus costs incidental to supplier’s breach ❖ Defences for supplier ❖ S47(4) of the CPA (NB) ❖ Defences for an alleged failure are if: 1. Supplier arranges with: Other person to supply same quality goods and services to satisfy consumer’s request and Consumer accepted and Other person actually supplies goods & services Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  25 Pass and Prosper 2. Supplier arranges with another person but consumer unreasonably refuses ❖ Supplier is not liable if ❖ S47(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 (b) Supplier took reasonable steps to inform the consumer of the shortage of stock ❖ S47(6) of the CPA ❖ A shortage of stock is not ‘‘due to circumstances beyond the supplier’s control’’ if: ❖ the shortage results directly/indirectly from a failure by supplier to adequately carry out any ordinary duty pertaining to their business. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  26 Pass and Prosper Study Unit 10: Accountability to consumers Lay-by ❖ Overview agreements ❖ S62(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. ❖ The goods remain at the risk of the supplier until the goods have been delivered to the consumer. ❖ Failure to deliver goods ❖ S62(2) of the CPA (NB) ❖ If supplier is unable to deliver goods when the consumer has paid the full price, ❖ 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: 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. ❖ Limitation ❖ S62(3) of the CPA ❖ “Circumstances beyond suppliers control” is not a defence if: ❖ Shortage of goods is due to supplier not carrying out business adequately. ❖ E.g. did not order enough stock even though demand was high or lay-by already concluded). ❖ Cancellation of agreement ❖ S62(4) of the CPA (NB) ❖ 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 ❖ Supplier may: charge a reasonable termination penalty of maximum one percent of the full purchase price and Must refund the rest to consumer. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  27 Pass and Prosper ❖ EXCEPTION ❖ S62(5) of the CPA (NB) ❖ Termination penalty may not be charged if: If consumer’s failure to complete payment was due to the death/hospitalisation of consumer; or unless supplier informed the consumer of the fact and extent of the penalty before the consumer entered into the lay-by agreement. ❖ Will be difficult to prove by the supplier unless included in the written agreement and signed by the consumer as proof. Franchise ❖ Overview agreements ❖ Franchise agreement- 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. ❖ The franchise agreement lays out the duties of each party and what compensation they can expect. ❖ Formal requirements ❖ S7(1) of the CPA: (NB) Must be in writing Signed by / on behalf of franchisee In plain and understandable language (s 22) Must contain minimum prescribed information ❖ Cooling-off right ❖ S7(2) of the CPA (NB) ❖ A franchisee may cancel without cost/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 Pre-disclosure ❖ Overview documentation ❖ STAGE 1: Pre-disclosure documentation and information and information ❖ Prescribed by regulation 3 ❖ Franchisor must disclose document 14 days before signing of franchise agreement ❖ The document must include: (Reg 3(1)) NB Number of outlets; Growth of turnover, net profit of individual outlets No material changes in franchisor’s financial position Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  28 Pass and Prosper Written projections: potential sales, income, profits etc. Certification by financial officer/auditor: i. certifying certain information regarding the financial position of the franchisor, and ii. information of the existing franchisees as going concern Content ❖ Overview requirements for ❖ STAGE 2: Content requirements for franchise agreements franchise ❖ Prescribed by regulation 2 agreements ❖ In terms of Reg 2 every franchise agreement must: contain S7(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/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/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. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  29 Pass and Prosper Study Unit 11: Consumer Protection Institutions and Enforcement Enforcement of ❖ Overview consumer rights ❖ There are various institutions responsible for redress. ❖ Hierarchy for redress ❖ S69 of the CPA: a) Direct referral to NCT b) Ombud with jurisdiction c) Accredited Industry Ombud / or (provincial) consumer court / or ADR agent / filing complaint with NCC d) Normal courts. (only if all other remedies available have been exhausted) ❖ Normal courts are the last option to keep consumer disputes out of court and solve with alternative dispute mechanism. ❖ In practice: problematic as the other routes of redress listed in section 69 not effective or not implemented properly. ❖ Also, hierarchy as listed in S69 is not the way disputes are dealt with in practice. ❖ Chirwa v Transnet Ltd and Others 2008 (4) SA 367 (NB) ❖ CC Held: ❖ Where a specialised framework has been created for the resolution of disputes, parties must pursue their claims primarily through such mechanisms. ❖ 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 under s 4(1) of the CPA. ❖ However, s 69(d) can reasonably be construed to have more than one meaning, thus rendering it susceptible to the interpretative aid contained in s 4(3). ❖ Case in summary, emphasises pursuing claims through specialised mechanisms before approaching civil courts National ❖ Overview Consumer ❖ NCC is the primary institution that enforces CPA Commission ❖ Whilst NCT is seen as the “appeal institution” unless a direct referral is made ❖ NCC established in terms of CPA and only has jurisdiction over consumer matters ❖ But NCT established in terms of NCA and has jurisdiction over both credit agreements in terms of NCA as well as consumer agreements in terms of CPA ❖ NCC is an independent juristic person ❖ It Consists of: National Consumer Commissioner Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  30 Pass and Prosper Inspectors Support Staff ❖ Following persons in terms of S4(1) may approach the court: 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); and e) an association acting in the interests of its members. ❖ Duties and obligations of NCC, ❖ S72 of the CPA ❖ When it receives a complaint, it may: Issue notice of non-referral (matter is not going to be investigated or taken further) if: Claim is frivolous Claim is vexatious Claim does not allege any facts Prevented from being referred in terms of s 116 CPA Refer complaint to: ADR agent Provincial Consumer Protection Authority or Court (**unless parties have already taken that route and was unsuccessful) May refer to NCC inspector in order to investigate Refer the complaint to another regulatory authority with jurisdiction over the matter for investigation; or Direct an inspector to investigate the complaint as quickly as practicable. ❖ Outcome of Investigation: ❖ S73 of the CPA ❖ After concluding investigation, NCC may: Issue notice of non-referral; or In event of offence, refer to NPA; or In event of prohibited conduct: a) Refer to equality court if prohibited conduct falls under Part A (right to equality in consumer market); OR b) Refer to NCT; OR c) Suggest a draft consent order; OR d) Issue a compliance notice Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  31 Pass and Prosper National ❖ If NCT receives a referral: Consumer ❖ NCT must conduct a quick, inquisitorial, informal, and in Tribunal accordance with rules of natural justice, hearing ❖ Thereafter may make appropriate order such as: Granting temporary relief Declaring conduct = prohibited conduct Issue interdict Impose administrative fine Confirm consent order Condone non-compliance of NCT rules ❖ Non-compliance with NCT order: Person will be guilty of offence: A fine and/or 10 years imprisonment ❖ Appeal against NCT decision: Referred to full panel of NCT, Thereafter the High Court ADR Agents ❖ Authority of ADR agents ❖ S70 of the CPA ❖ Consumer may resolve any dispute relating to a transaction/agreement with a supplier by referring the matter to an alternative dispute resolution agent. (ADR Agent) ❖ An ADR Agent may be: ombud with jurisdiction e.g. the insurance ombud an industry ombud accredited in terms of section 82(6) e.g. Motor Industry Ombud of South Africa (MIOSA) a person/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 e.g. The Arbitration Foundation of Southern Africa (AFSA) ADR Proceedings ❖ ADR agents resolving disputes ❖ May record resolution of dispute in the form of an order; AND ❖ If parties agree, submit to NCT or Court to be made a consent order (may include damages) ❖ If ADR agent cannot resolve dispute? ❖ Agent may terminate process by way of notice to the parties; whereafter ❖ Party who filed complaint may refer to NCC. Powers of normal ❖ Jurisdiction courts to enforce ❖ Normally, may only be approached as last option in terms of consumer rights S69 of CPA. ❖ In the case of fair and just contract terms and conditions and unconscionable conduct: Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  32 Pass and Prosper ❖ Normal courts will have jurisdiction and may be approached first. Limitations of ❖ Limitation bringing action ❖ S116 of the CPA: ❖ A complaint may not be referred/made to the Tribunal or a consumer court if: Complaint has prescribed. (Prescribes after three years) Similar facts and same respondent already served before the NCT (excluding appeals) Standard of proof ❖ Standard of proof ❖ S117 of the CPA: ❖ In any proceedings before the Tribunal, or a consumer court the standard of proof is on a balance of probabilities Administrative ❖ Penalties penalties ❖ S112(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. Controversy ❖ Overview regarding ❖ Van Heerden- Naude and Eiselen hierarchy ❖ There is an implied hierarchy i.e. ombud with jurisdiction, accredited industry ombud, ADR agent etc. ❖ Case Law: (NB) ❖ Imperial Group v Dipico 2016 (NCNC) ❖ CPA must be interpreted in alignment with its purpose (S3) and the Constitution (S34). ❖ Only one option listed in S69. ❖ Consumer can approach any of the ADR forums- if this was not intention of legislation it would have been express and S70 clarifies this. ❖ Forum Shopping: 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 2016 (FB) ❖ Last resort. ❖ Civil court has jurisdiction but only after all avenues have been exhausted. ❖ Imperial v MEC 2016 (FB) ❖ Confirmation of Chirwa: where a specialised framework for resolution of disputes has been established. ❖ Parties must pursue claims primarily through such mechanisms. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  33 Pass and Prosper ❖ Implied hierarchy is unclear though. ❖ Motus Corporation v Wentzel 2021 (SCA) ❖ S69(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. ❖ There is no clear hierarchy- had that been the aim it would have been clearly set out and not implied. ❖ S69 refers to consumers pursuing all other remedies to other consumer protection legislation. ❖ First Engineering 2022 (ECP) ❖ Taking away right of consumer to enforce rights directly would not be fair. ❖ Case followed approached in Motus and distinguished between enforcement of a right in the CPA and enforcement of common law right- with the latter- cannot be deprived of right to approach court. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  34 Pass and Prosper NCA: 6-12 Study Theme 6: Reckless credit and over-indebtedness Introduction Overview ❖ NCA contains new important measures. ❖ Twofold approach: ❖ Prevention of reckless lending and over-indebtedness, and ❖ Alleviation of over-indebtedness ❖ EXCLUSIONS: ❖ Measures not applicable if: ❖ Consumer is juristic person ❖ Provisions regarding reckless credit not applicable if: Pawn transaction; Incidental credit agreement; Temporary increase credit limit under credit facility Prevention of Overview Reckless Credit ❖ Compulsory Assessment: ❖ Before credit provider enters into a credit agreement, they must take reasonable steps to assess: Proposed consumer’s understanding and appreciation of risks, costs, rights and obligations; Proposed consumer’s debt re-payment history as consumer under credit agreements; If there is a commercial purpose for applying for credit, the reasonable estimated future revenue flow from the business purpose; and Proposed consumer’s (and family and household member’s) existing financial means, prospects and obligations [Regulation 23A of NCA applies to this one]. ❖ Regulation 23A ❖ Assessment must be fair and objective and must comply with Reg.23A ❖ Objective of Reg: ❖ Assess whether the consumer: ❖ Can afford the proposed credit agreement, or ❖ An increase in the limit of an existing credit agreement. ❖ To determine this, the credit provider must assess the consumer’s: 1. Discretionary income ❖ Amount available to pay the credit instalments. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  35 Pass and Prosper ❖ Includes gross monthly income, less statutory deductions, less necessary living expenses and less other committed payment obligations. 2. Minimum living expenses ❖ Credit provider must deduct prescribed fixed amounts of living expenses e.g. food, transport etc. ❖ Unless convinced otherwise that such expenses are the prescribed amount. ❖ Regulation provides remedies to consumers who are aggrieved by the outcome of the affordability assessment. ❖ Case law: ❖ ABSA Bank v Kganakga ❖ The court held that with regard to the proposed consumer’s understanding and appreciation of risks, costs, rights and obligations, ❖ The following factors are to be considered by the courts: ❖ Firstly, the consumer’s state of mind relating to their understanding and appreciation of the risks, costs, rights and obligations under the agreement. ❖ Second is the consumers previous experience and behaviour as a consumer under credit agreements. ❖ Third, the finances of the proposed consumer at the time of the application. ❖ Standard Bank v Panayiotts ❖ Case dealt with the meaning of “financial means, prospects and obligations”. ❖ Held that: Financial means include income and expenses as well as assets and liabilities. ❖ Prospects must include prospects of improving the consumer’s financial position, such as increases, and even liquidating assets. ❖ Truworths Ltd v Minister of Trade and Industry ❖ Court set aside Regulation 23A(4) and ❖ Held that it was unfair to require unbanked and informal traders to produce financial statements in order to validate their gross income. ❖ Mainly because most of them cannot comply with this requirement. Credit provider’s Overview complete defence ❖ NCA places obligation on consumer to answer credit provider’s request for information, fully and truthfully. ❖ This is where credit provider obtains the information to do the assessment. Disclaimer: These notes are provided by Pass and Prosper for free and are drafted by Pass and Prosper tutors for their own studying benefit. These notes are not sold for profit and therefore, they may occasionally be minor mistakes. In such an event, please contact the tutor to effect the correction.  36 Pass and Prosper ❖ Defence: ❖ Credit provider has a defence against an allegation of reckless lending if consumer failed to answer fully and truthfully. ❖ According to Court/Tribunal the credit provider’s ability to do a proper assessment was materially affected by this failure. Forms of reckless Overview credit ❖ There are 3 forms of reckless credit ❖ Form is determined by credit provider’s assessment obligation and what happens thereafter ❖ First form of reckless credit ❖ Failure to conduct assessment at time credit agreement was made or at time, the amount in terms of agreement is increased. ❖ The mere failure to conduct compulsory assessment constitutes recklessness. ❖ Is irrelevant whether consumer could afford the credit or not at time of conclusion. ❖ Second form of reckless credit ❖ If consumer did not generally understand the risks, costs and obligations under proposed agreement. ❖ The disregard of consumer’s ignorance constitutes recklessness. ❖ Third form of reckless credit ❖ If outcome of the assessment indicates that entering into agreement will cause over-indebtedness but