The Consumer Protection Act, No. 68 of 2008, became fully effective today, 31st March 2011. However, the regulations, which contain many of the pieces of the puzzle for those suppliers of goods or services who have to comply with the Act, have not yet been published.
This leaves both suppliers and consumers in an invidious position. Across industries, South African suppliers are waiting with bated breath to see whether the regulations will be published tomorrow, as some rumours would have it.
The contents of the regulations is of substantial importance, since there are several far-reaching problems with the wording of the draft regulations, which were issued in November 2010 for public comment. A few examples: the regulations provide that fixed-term agreeements may not have a duration of more than 24 months. This includes property leases and a wide variety of commercial contracts. In addition, if a consumer cancels a fixed-term contract (this is a right granted to consumers as from today, in terms of section 14 of the Act), the maximum cancellation fee a supplier can charge is 10% of the balance of the amount due under the contract.
The regulations are also intended to provide much-needed guidance on which contract terms are regarded as being “unfair, unreasonable or unjust”. A list of terms “deemed” to be unfair, unreasonable or unjust is included in the draft regulations. The problem is, that the list was intended to be a “grey list” i.e. a list of terms regarded as being unfair, unreasonable or unjust, unless the supplier demonstrates that in the circumstances, the term is reasonable. This is achieved if the terms are not “deemed”, but rather “presumed” to be unfair, unreasonable or unjust. I hope that this error, which has been pointed out to the drafters, in corrected in the final regulations.