We call know how it goes.

You answer an unknown number against your better judgment only to be accosted by a person trying to sell you something which you don't need, whether it is a cell phone contract, a gym membership or a funeral policy. The Consumer Protection Act 68 of 2008 ('the CPA') now regulates direct marketing. It prescribes the times at which consumers may be contacted and will establish a registry where consumers can opt out of direct marketing. On 8 July 2011 the Department of Trade and Industry published a notice in the Government Gazette calling for objections against appointing the Direct Marketing Association of South Africa as the preferred service provider for running the registry. This has given rise to considerable controversy (see Direct marketing spat goes public on ITweb (27 July 2011) and The Direct Marketing Association of South Africa responds to spat on Marketingweb (4 August 2011)). Apart from these teething problems, direct marketers are faced with provisions which are anything but clear, particularly when it comes to their practical application. The cooling off right given to consumers is a good example.

The CPA provides that a consumer may cancel a transaction 'arising out of' or 'resulting from' direct marketing within 5 days from delivery or the date of the transaction whichever is the latest. The wording of the Act relating to direct marketing is too wide and has given rise to considerable interpretive difficulties and unintended consequences.

Direct marketing 'means to approach a person, either in person or by mail or electronic communication, for the direct or indirect purpose of...promoting or offering to supply, in the ordinary course of business, any goods or services to the person' (section 1). The definition itself is not that problematic, but the consequences attached to an agreement resulting from this type of marketing are too wide. Section 16(3) provides that 'a consumer may rescind a transaction resulting from any direct marketing without reason or penalty, by notice to the supplier in writing, or another recorded manner and form, within five business days after the later of the date on which - (a) the transaction or agreement was concluded; or (b) the goods that were the subject of the transaction were delivered to the consumer.' This means that '[t]he consumer may return goods to the supplier, and receive a full refund of any consideration paid for those goods, if the supplier has delivered goods to the consumer in terms of an agreement arising out of direct marketing, and the consumer has rescinded that agreement during the cooling-off period, in accordance with s 16' (s 20(2)(a)).

This raises several questions. How closely must the conclusion of the contract be connected to the direct marketing for the cooling off right to apply? Say for instance a retailer puts an advertisement for various products in my post box. Can it be said that when I get into my car, drive to the store and I purchase the advertised products that I have concluded the transaction as a result of direct marketing? Does the cooling off right apply to services and if so how will it work in practice? How do you return services which have already been rendered? The principal question here is what does arising or resulting from mean?

Apart from the common law principles of causation which may or may not assist depending on the facts, the Act dictates that appropriate foreign law may be used when interpreting its provisions (s 2(2)). Here the EU Directive on the protection of consumers in respect of distance contracts provides some instruction (Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts).

There a 'distance contract' is defined as 'any contract concerning goods or services concluded between a supplier and a consumer under an organized distance sales or service-provision scheme run by the supplier, who, for the purpose of the contract, makes exclusive use of one or more means of distance communication up to and including the moment at which the contract is concluded'. This means that for the Directive to apply 'distance communication' must be the only means of interaction between the consumer and the supplier. In other words, if the consumer takes the additional step of going to the store and purchasing the item, the consumer will not be entitled to the cooling off period. It is submitted that the CPA must also be interpreted in this way.

When it comes to the delivery of services the EC Directive is also of use. Where the supplier has already rendered the services (which are of course impossible to 'return' in most instances) the consumer loses the right to rely on the cooling off right. This right can only be exercised (in the case of contracts for services) from the day of the conclusion of the contract or from the day on which the consumer is informed of his or her cooling off right (art 6).

Interestingly, in respect of goods too, the 7 day period given in the EC Directive only starts to run once the consumer is informed of their right to cancel the contract. The CPA also places an obligation on suppliers to inform consumers of their right to cancel the agreement (s 32). However, the Act is silent on the effect of a failure to do so and although s 32(2) says that this information must be given in a prescribed form, no such form is provided. Here too suppliers do not have to be left out in the cold. Article 5 of the EC Directive contains a list of disclosures which must be made in this regard. It is probably advisable to follow these instructions while we wait for word from the NCC.

- Elizabeth de Stadler (August 2011) - Originally published in the Legalbrief web site on the 24 August 2011

**Please note that these comments are summarised, may not be applicable to your particular situation and do not constitute legal advice. Please consult your legal professional should you wish to obtain a formal legal opinion.**