Right to fair and honest dealing

The Consumer’s right to fair and honest dealing encompasses the following provisions in the Act:

  • Unconscionable conduct (Section 40);
  • Prohibiting false, misleading or deceptive representations (Section 41);
  • Fraudulent schemes and offers (Section 42);
  • Pyramid schemes (Section 43);
  • Consumer’s right to assume the supplier is entitled to sell goods (Section 44);
  • Auctions (Section 45);
  • Changes, deferrals and waivers and substitution of goods (Section 46); and
  • Over-selling and over-bookings (Section 47).

Some of the provisions listed above are expanded upon in more detail as follows:

Unconscionable conducts:

  • Section 40: A supplier (or agent of a supplier) must not use physical force, harassment, or undue influence against a consumer in connection with any marketing or supply of goods or services to the consumer, or when negotiating, executing or enforcing an agreement to supply goods or services or when demanding payment for them or recovery of goods from the consumer.  This list is not exhaustive.
  • It is also unconscionable for a supplier to knowingly take advantage of a consumer that is substantially unable to protect his or her own interests because of  physical, mental disability or illiteracy, ignorance, inability to understand the language of an agreement, or any other similar factor.
  • Unconscionable conduct that results in a transaction or agreement is deemed to be a prohibited transaction in terms of Section 51.

False and misleading or deceptive representations:

  • Section 41: A supplier (or anyone else on behalf of the supplier) must not by words or conduct in relation to the marketing of goods and services: directly or indirectly express or imply a false, misleading or deceptive representation concerning a material fact to a consumer; use exaggeration, innuendo or ambiguity to a material fact; fail to correct an apparent misapprehension on the part of the consumer, or permit or require an employee or agent to do so on behalf of the supplier.
  • Section 41 sets out an extensive, but not exhaustive, list of examples of what amounts to a false, misleading or deceptive representation, including some of the following (not all have been included here, refer to the section for further detail): the nature, properties, advantages or uses of the goods or services; the manner in or conditions on which the goods or services may be supplied; the price of the goods or services; the sponsoring of an event; any other material aspect of the goods or services.
  • False misleading representations ties in with right to choose and the right of the consumer to obtain pre-authorised quotes and estimates.
  • A statement will, amongst others, be false, misleading or deceptive if the supplier falsely states or implies that a necessary service, maintenance or repair facilities or parts are readily available for or within a reasonable period, or any service, part, replacement, maintenance or repair is needed or advisable.
  • Also ties in with the right to disclosure and misleading trade descriptions.
  • Where a supplier engages in deceptive, fraudulent or misleading marketing, the court may make a declaration to that effect, and make any further order that is just and reasonable in the circumstances.

Over-selling and over-booking (Section 47):

  • Supplier’s obligations: Must not accept payment for any goods or services unless the supplier has a reasonable basis for saying that he / she will be able to supply those goods or provide those services; Must not supply goods or services that are materially different from the goods or services paid for; Must honour a commitment to supply goods or services on a specified date or time.
  • Consequences of breach: If the supplier fails to honour its commitment because of insufficient stock or capacity, it must refund the consumer the amount (if any) paid in respect of that commitment or reservation, plus interest at the prescribed rate, as well as compensate the consumer for costs directly incidental to the supplier’s breach of contract.
  • Defences available to supplier: Where the supplier offered to get another person to supply the consumer with comparable goods or services and the consumer accepted the offer or unreasonably refused it; The supplier will not be liable if the shortage or capacity is due to circumstances beyond the supplier’s control and the supplier took reasonable steps to inform the consumer of the shortage of stock or capacity as soon as it was practicable to do so in the circumstances.  The shortage will not be considered to have been beyond the supplier’s control if it was as a result of the supplier’s lack of diligence, thus the supplier will not be able to escape liability easily.

Refer to the Act for detail on sections 42-46, and particularly Regulations 13-16, which must be read together with Section 42(8), 51 and 120 of the Act, and which relate to:

  • Prohibition on intermediary arranging transport contracts – Regulation 14;
  • Fraudulent Public Property syndication schemes – Regulation 15;
  • Prohibition on feasibility studies promising funding – Regulation 16;
  • Calculation of interest for multiplication scheme – Regulation 17; and
  • Auctions – Regulations 18-33.