Attorneys are suppliers too
19/12/2011

Some implications of the CPA for the legal profession
Introduction
As most readers know by now, the Consumer Protection Act, 2008 (“CPA”) came into effect on 1 April 2011. It applies to every transaction concluded within South Africa between suppliers (acting in the ordinary course of business) and consumers.

A supplier is a person (including a juristic person) that markets goods or services. The definition of “services” is open-ended and includes work undertaken for the benefit of another as well as the provision of information, advice or consultation. As such, attorneys can be classified as suppliers in terms of the CPA.

A consumer can either be a natural person or a juristic person. However, where the consumer is a juristic person, the CPA will not apply if the consumer had an asset value or annual turnover of more than R2 million in the previous financial year. Despite this, if a supplier has supplied goods to a consumer and those goods caused harm, section 61 of the CPA (product liability) will still apply.

This means that the CPA will not apply if an attorney acts for a large corporate client which meets the aforesaid requirements. However, if the attorney provides services to any individual or a juristic person that falls under the above threshold, the attorney needs to keep the CPA’s provisions in mind.
Scope of the CPA
The CPA’s provisions broadly relate to the marketing of goods and services, transactions between supplier and consumers and, in some instances, to goods and services themselves. Generally, attorneys do not sell goods. As such, the provisions dealing with the marketing and provision of services are most relevant.

Even so, an attorney should consider whether there is any possibility that he or she might sell goods in the course of practice. Some attorneys might sell properties out of deceased or insolvent estates. However, in most instances they do so in their official capacity as liquidator or executor, and not as the seller of the property. It would still be prudent to ensure that the provisions of the CPA are followed if the underlying sale is subject to the act.

It must also be kept in mind that the CPA’s definition of “goods” is very wide. It includes any “literature, music, photograph, motion picture, game, information, data, software, code or other intangible product written or encoded on any medium, or a licence to use any such intangible product”. Some might therefore argue that the CPA will apply if an attorney prepares a document for a client. (For example, an agreement is an intangible product and some attorneys license the use of such documents to clients.)

There are various provisions in the CPA that might have an effect on legal services. Below, we discuss some of the more important ones.
Service standards
Ethical and professional rules already require attorneys to provide services that are up to standard. However, legal services must now also comply with the provisions of section 54.

Section 54 sets out the rights of a consumer when a supplier provides services to a consumer. In short, a consumer has a right to:
• timely performance and completion of services, and timely notice of any unavoidable delay in the performance of the services;
• the performance of services in a manner and quality that persons are generally entitled to expect;
• the return of any property or control over any property of the consumer in at least as good a condition as it was when the consumer made it available to the supplier for purposes of performing the services; and
• the use, delivery or installation of goods that are free of defects and of a quality that persons are generally entitled to expect, if any goods are required for performance of the services.

The CPA also states that the circumstances of the supply, and any specific criteria or conditions agreed between the parties, must be taken into account. As such, if a client sets a deadline for an instruction, that fact will be taken into account when determining whether the attorney provided an adequate service.

If a service does not comply with the standards set out in section 54, the consumer may require the supplier (attorney) to either:
• remedy any defect in the quality of the services; or
• refund a reasonable portion of the price (fees) paid for the services performed (and goods supplied), having regard to the extent of the failure.

Sections 19(6) and 21(c) of the CPA are also relevant in this regard. Where a supplier delivers or performs services at a location, date or time not agreed to between supplier and consumer, the consumer can reject the performance of the services. The services will then be regarded as “unsolicited services” and the consumer need not pay for such services. This means that where a client requires an attorney to provide advice on a certain issue on a certain date and the attorney performs outside that date, such advice could possibly be seen as unsolicited services.
Other significant rights of consumer under the CPA
In terms of section 13, a consumer has the right to choose suppliers. A supplier may not require a consumer to enter into an additional agreement or transaction with a designated third party or agree to purchase any particular goods or services from a designated third party. An attorney would therefore need to give a client the right to select any third party service provider that might be used. This could relate to the services of a tracing agent, auctioneer or even an advocate. However, section 13 does provide for exceptions, for instance where the supplier can show that there is an economic benefit involved for the consumer.

Section 26 regulates consumers’ rights relating to sale records. A supplier must provide a written record of each transaction to the consumer to whom many goods or services are supplied. The section lists the information to be concluded in such notice, including details of the supplier, the date of the transaction and a description of the services.

Consumers now have the right to contract on terms and prices which are fair, reasonable and just. In terms of section 48(2), a term or condition is unfair, unreasonable or unjust if it is excessively one sided in favour of any person other than the consumer or if the terms of the agreement are so adverse the consumer as to render the agreement inequitable. Regulation 44 of the CPA Regulations also provides a list of terms which are deemed unfair, unreasonable or unjust.
The CPA’ contains various provisions relating to marketing and promotions. Generally, attorneys need to ensure that their marketing is not false, misleading, deceptive or ambiguous.
Conclusion
The attorneys’ profession is already regulated by legislation and the rules of the various law societies. The CPA has now added an additional compliance burden.
The act should not be problematic for attorneys who already follow best practice, but it may cause issues for attorneys that do not comply with industry standards. The National Consumer Commission is showing that it is serious about enforcing the CPA and has created a relatively simple procedure of the filing of complaints. As such, one might soon find complaints against attorneys being filed with the Commission.
Euphemia Annor (professional assistant) and Danie Strachan (senior associate), Corporate & Commercial Department, Adams & Adams

The article was verified by André Visser, Partner: Corporate & Commercial Department, Adams & Adams