Fasa Newsletter
 
Barcelos
 
PROPOSED THRESHOLD FOR JURISTIC PERSONS WHO ARE EXCLUDED FROM CERTAIN PROVISIONS OF THE CONSUMER PROTECTION ACT
The Minister for Trade and Industry, Dr Rob Davies, has recently announced the proposed threshold for those consumers who are juristic persons and who will be excluded from the vast majority of the provisions of the Consumer Protection Act No 68 of 2008. The Act provides that it will not apply to any transaction involving a juristic person whose asset value or annual turnover, at the time of the transaction, equals or exceeds the stated threshold value.

A juristic person includes companies, close corporations, partnerships, associations and trusts.

The Minister has proposed a threshold value of R3million for juristic persons. In other words, if the asset value or annual turnover of the juristic person equals or exceeds R3million, and that entity is a customer or client to whom your organization provides goods or services, then the vast majority of the provisions of the Consumer Protection Act will not apply to the transaction.

The Minister has invited comments on the proposed threshold by 31 October 2010.

The proposed threshold is critical for all suppliers to consider in light of the following:
  • It was originally anticipated that the threshold value was to be R1million. The immediate effect of the proposed higher figure of R3million is that it will cast the net far wider in terms of those juristic entities who will ultimately fall within the definition of a consumer. This will place a greater burden on all suppliers of goods or services, who will need to ensure that they are fully compliant with the provisions of the Act.
  • The Act is extensive and will regulate inter alia the manner in which suppliers market and promote their goods or services, the quality of those goods or services, and the terms and conditions upon which those goods or services are to be supplied. Suppliers who attempt to manage, restrict or exclude their liability in some shape or form for the supply of defective goods or services (for example through the use of disclaimers, exclusions, exemptions and limitation on liability clauses) will need to ensure that any such provisions are fully compliant with the Act, otherwise they will inter alia be unenforceable under the Act.
  • The threshold is to be determined with reference to the juristic person’s asset value, as set out in its balance sheet, or its annual turnover, as set out in its income statement, for the immediately previous financial year. This in itself presents an immediate practical difficulty for suppliers, who may not necessarily have any knowledge of what asset value or annual turnover has been recorded in that juristic person’s financial statements for the previous financial year. In the rush to conclude business, particularly in sales intensive environments, this aspect could be easily overlooked or not fully investigated.
  • In addition, even if a supplier makes the necessary enquiries and obtains the financial statements, whatever figures are recorded therein do not automatically represent the true position. The Notice issued by the Minister goes on to provide that if, between the date of the financial statements being used to calculate the asset value or annual turnover, and the date on which the calculation is being made, that juristic person has acquired any subsidiary company, associated company or joint venture not shown on those financial statements, or has divested itself of any subsidiary company, associated company or joint venture shown on those financial statements, the value of those recently acquired or divested assets or the turnover generated by those recently acquired or divested assets must be accounted for in the calculation of that juristic persons asset value or annual turnover.
  • This makes it exceedingly difficult for suppliers to determine whether or not their customers fall within the definition of a consumer. Many suppliers have been acting on the assumption that, because their customers are large corporate entities, they can relax and do not need to concern themselves with the provisions of the Act. The proposed increased threshold value, and the uncertainty that will face suppliers in determining the true financial position of their customers, makes it imperative that all suppliers consider the effect of the Act on their businesses.  
As per previous email alerts, the general effective date of the Consumer Protection Act has been delayed until 31 March 2011. This affords all suppliers with an opportunity to consider whether the customers or clients to whom they provide goods or services fall within the definition of a consumer and will inter alia enjoy the considerable benefits and protection that the Act will afford those persons.

Author: Lee Astfalck
LIVINGSTONE CRICHTON ATTORNEYS
Email: leea@livingstonecrichton.co.za
Website: www.livingstonecrichton.co.za
Tel: 011 884 8334

Important Notice:
Kindly note that this publication is not and shall not be construed as legal advice and is issued solely for general information purposes. Recipients of this publication should not rely on this publication in any specific circumstance and professional legal advice should be taken.
Copyright © 2010 Livingstone Crichton
 
Links
FRANCHISE GRADUATES FROM THE DA VINCI INSTITUTE
..................................................................
PROPOSED THRESHOLD FOR JURISTIC PERSONS WHO ARE EXCLUDED FROM CERTAIN PROVISIONS OF THE CONSUMER PROTECTION ACT
..................................................................
DOMINO’S PIZZA TO GIVE DREAM JOB TO ONE PERSON FOR ONE HOUR
.................................................................
MARRY AT MCDONALDS!
.................................................................
FASA NOW ON TWITTER AND FACEBOOK
.................................................................
CONGRATULATIONS TO RASHEED KATHRADA – FASA’S NEW CHAIRMAN
Business Tip

“Personal expenses take 2nd place in your own business.”

Johan Van Eyk
Barcelos Flame Grilled Chicken

Click here for more information

Social Media

 
www.fasa.co.za · Find out about becoming a FASA member
 
Copyright © FASA 2009