When a small business is protected by the CPA
When a small South African business buying goods or services counts as a consumer under the CPA, where that protection stops, and what records to keep.
By Achekam · · 4 min read · For Running a business businesses in South Africa
Most small business owners think of the Consumer Protection Act as a set of rules they must follow when selling. It rarely occurs to them that the same Act may protect them when they buy. A hair salon buying a faulty dryer, a two-person design studio signing for a printer it cannot get repaired, a guesthouse whose new geyser fails in month three: each is a small business on the receiving end of a bad purchase.
Whether the CPA helps depends on the size of the business and the kind of transaction. This guide sets out the turnover test the dtic describes, how far the Act reaches, the rules that do not apply between companies, the product-safety duties that apply regardless, and the records that make a claim possible.
The turnover test in the dtic booklet
The dtic's booklet on the Consumer Protection Act says a business with total annual turnover of less than R2 million is also protected as a consumer under the CPA. The dtic's plain-language CPA booklet sets out consumer rights under the Act, including the warranty of quality on goods and returning goods, in everyday language.
Two cautions apply. The booklet is dated April 2020, and a figure published then may since have changed, so confirm the current threshold before relying on it. And the test is total annual turnover, not profit or the size of the purchase: a business with modest profits but turnover above the threshold falls outside it.
If your business is under the threshold, it can expect the same treatment as an individual customer when it buys goods or services, subject to the limits below. If it is over, it should rely on its contracts and the general law instead.
The CPA's reach over transactions in South Africa
The National Consumer Commission says that under section 5 of the CPA it has jurisdiction over every transaction in South Africa and the promotion and supply of any goods or services in the country, unless exempted. That is wide. A purchase from a local supplier, a national retailer or an online seller supplying in South Africa is in principle within the Commission's reach.
For a qualifying small business, the most useful protections are usually the same ones individual consumers rely on: the right to return defective goods and choose the remedy, and clear information about price and terms. Faulty goods: repair, replace or refund explains the first of those.
Fixed-term rules that do not apply between juristic persons
One limit catches small companies out. The CPA text published on the government's page lets a consumer cancel a fixed-term agreement at any time on 20 business days' written notice, and requires the supplier to notify the consumer 40 to 80 business days before the term ends. But section 14, as originally published, does not apply to transactions between juristic persons.
So a small company that signs a fixed-term contract for, say, a photocopier lease or security monitoring with another company should not expect section 14 to let it walk away early, whatever its turnover. A sole proprietor, who is not a juristic person, stands differently. Read the contract's own cancellation terms before signing; cancelling fixed-term contracts under the CPA covers the rule from the supplier's side.
Product safety duties even where a transaction is exempt
Some protections survive even when the CPA does not otherwise apply. The NCC says that even where a transaction is exempt from the CPA, the goods supplied, and their supplier, importer, producer, retailer and distributor, remain subject to sections 60 and 61 of the Act. Those sections deal with product safety recalls and liability for damage caused by goods.
In practice, if equipment your business bought turns out to be unsafe or causes damage, the supply chain's duties under those sections can still be relevant, whatever your turnover and whoever you bought from. Report the problem to the supplier in writing and keep the goods and the documents.
Keeping quotations and matched invoices as evidence
Any claim, under the CPA or under a contract, rests on being able to show what was promised and what arrived. That is where good purchasing records pay off.
In Achekam's procurement module, supplier quotations are captured against a requisition and one is selected; choosing one that is not the cheapest needs a written reason, which is kept. A quotation can also be disqualified with a reason. When the supplier's invoice is recorded against the order, it is matched with what was ordered and what arrived, and if the price or quantity differ it is held until someone writes a resolution note.
Those records answer the questions a supplier, the Commission or a court will ask: what did the supplier quote, what did you order, what was delivered, and when. A business that buys through an informal WhatsApp message and a cash payment has much less to show.
Before you rely on the CPA as a buyer
- Check your total annual turnover against the current threshold.
- Note whether the seller is a company and whether you are, which matters for fixed-term contracts.
- Keep the quotation, order, delivery note and invoice for every significant purchase.
- Report faults to the supplier in writing, with dates.
- For unsafe goods, keep the item and raise it with the supplier, whatever your size.
Treat your own purchases with the same care you expect from your customers. The paperwork that protects a small business as a buyer is the same paperwork its accountant needs anyway.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
