Does the Act apply to your Organisation?

The Act regulates the activities of suppliers and creates rights for consumers.  It applies to virtually every entity supplying goods and services in South Africa and the transactions it enters into with consumers.

Definition of a Supplier:

A person or an entity who markets Goods and Services in their normal course of business, irrespective of whether the supplier:

·         Resides or has its principal office within or outside the Republic

·         Operates on a for-profit basis or otherwise

·         Is an individual, company, close corporation, partnership, trust, organ of state, an entity owned or directed by an organ of state, a person contracted or licensed by an organ of state … or is a public-private partnership

·         Is required or licensed in terms of any public regulation to make the supply of the particular goods or services available.

 

Definition of a Consumer:

·         A  person to whom particular goods or services are marketed in the ordinary course of the supplier’s business,

·         A  person who has entered into a transaction with a supplier in the ordinary course of the supplier’s business,

·         A user of those particular goods or recipient or beneficiary of those particular services, irrespective whether that user, recipient or beneficiary was a party to a transaction …

·         A small business whose income is less than R2 million or a Sole Proprietor (regardless of Turnover),

·         A  franchisee in terms of a franchise agreement.

 

 The definition of transaction given in the Act has three components:

 

 

Voluntary associations

Also included in the definition of a transaction is the supply of any goods or services in the ordinary course of business to any of its members by a club, trade union, association, society or other voluntary association sharing a common purpose. This is true even if nothing is charged for the service or if there is no fee or economic contribution required to be a member (Section 5(6)).

Franchise transactions

The following transactions relating to a franchise relationship are specifically stated by Section 5(6) to be transactions covered by the Act:

·         A solicitation of offers to enter into a franchise agreement

·         An 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

·         The supply of any goods or services to a franchisee in terms of a franchise agreement.

 

The Act applies to the above transactions relating to a franchise relationship irrespective of whether the size of the juristic person falls above or below the threshold determined by the Minister. The threshold is the dividing line, determined according to the size of a business in terms of assets or annual turnover, between companies that are eligible to be treated as consumers under the Act and those that are excluded (Section 5(7)). Franchises are considered more fully in Chapter 11.

The definition of the term Market:

To Promote:

·         Advertise, display or offer to supply any goods or services in the ordinary course of business, to all or part of the public for consideration;

·         Make any representation in the ordinary course of business that could reasonably be inferred as expressing a willingness to supply any goods or services for consideration; or

·         Engage in any other conduct in the ordinary course of business that may reasonably be construed to be an inducement or attempted inducement to a person to engage in a transaction

To Supply:

·         In relation to GOODS: includes sell, rent, exchange and hire in the ordinary course of business for consideration;

·         In relation to SERVICES: means to sell the services, or  to perform or cause  them to  be performed or provided, or to grant access to any premises, event, activity or facility in the ordinary course  of business  for consideration.

Consideration:

The consideration referred to in the definitions of promote and supply means anything of value given and accepted in exchange for goods or services, including: 

·         Money, property, a cheque or other negotiable instrument, a token, a ticket, electronic credit, credit, debit or electronic chip or similar object

·         Labour, barter or other goods or services

·         Loyalty credit or award, coupon or other right to assert a claim

·         Any other thing, undertaking, promise, agreement or assurance, irrespective of its apparent or intrinsic value, or whether it is transferred directly or indirectly, or involves only the supplier and consumer or other parties in addition to the supplier and consumer.

 

The definition of marketing refers to goods and services. These concepts are explained in the blocks below.

GOODS:

·         Anything marketed for human consumption;

·         Any other tangible object, including any medium on which anything is or may be written or encoded;

·         Any literature, music, photograph, motion picture, game, information, data, software, code or other intangible product written or encoded on any medium, or a license to use any such intangible product;

·         A legal interest in land or any other immovable property, other than an interest that falls within the definition of ‘service’ in this section; and

·         Gas, water and electricity

 

SERVICES:

·         Any work or undertaking performed by one person for the direct or indirect benefit of another;

·         The provision of any education, information, advice or consultation, except advice that is subject to regulation in terms of the Financial Advisory and Intermediary Services Act, 2002

·         Any banking services, or related or similar financial services, or the undertaking, underwriting or assumption of any risk by one person on behalf of another, except to the extent that any such service:

o    Constitutes advice or intermediary services that is subject to regulation in terms of the Financial Advisory and Intermediary Services Act

o    Is regulated in terms of the Long-term Insurance Act, 1998 or the Short-term Insurance Act, 1998.

·         The transportation of an individual or any goods.

·         The provision of:

o    Any accommodation or sustenance

o    Any entertainment or similar intangible product or access to any such entertainment or intangible product;

o    Access to any electronic communication infrastructure

o    Access, or of a right of access, to an event or to any premises, activity or facility

o    Access to or use of any premises or other property in terms of a rental.

·         A right of occupancy of, or power or privilege over or in connection with, any land or other immovable property, other than in terms of a rental; and

·         Rights of a franchisee in terms of a franchise agreement… irrespective of whether the person promoting, offering or providing the services participates in, supervises or engages directly or indirectly in the service.

 

Not covered by the Act:

The Act does not apply to everyone and everything. Those entities and transactions that are not considered by the Act to be consumers are listed below. This means that the entities mentioned do not enjoy the benefits of being a consumer, although they may still be bound by the requirements that apply to suppliers.    

Government - Transactions including supply of goods and services to the State - Section 5 (2)(a)

Big business - Transactions involving supply of goods and services to juristic persons (companies, closed corporations etc.) whose asset value or annual income is over the threshold value of R2 million and who are not a Sole Proprietor - Section 5 (2)(b)

Credit agreement - Any credit agreement under the National Credit Act (but the goods and services themselves are covered) -    Section 5 (2)(d)

Auctions – Goods purchased on an auction are not subject to the CPA although the behaviour of Auctioneers is covered by specific CPA regulations

Employment services - Services supplied under an employment contract - Section 5 (2)(e)

Collective bargaining agreements    - Collective agreements & Collective bargaining agreements in terms of the Constitution and Labour Relations Act - Section 5 (2)(f)

Exempted - If exempted by the Minister - Section 5 (2)(c),  Section 5 (3)(a) &  Section 5 (4)

Government

It is important to be aware that while the government, its agencies and municipalities (together ‘the State’) are considered to be suppliers under the Act and are bound by its requirements regarding the way they must deal with consumers, they are not entitled to be treated as consumers under it. In other words, those businesses that supply the State are not bound by the requirements of the Act in their dealings with the State.

The Minister has granted the smaller Municipalities a temporary reprieve but the larger Municipalities are subject to the CPA.

National Credit Act agreements

The Act does not apply to any transaction that constitutes a credit agreement under the NCA, but it applies to the goods or services that are the subject of the credit agreement.