Voetstoots and the CPA

Does the Consumer Protection Act, 2008 (“CPA”), which became effective on 1 April 2011, mean the end of the "voetstoots" or "as is" clause?

What does voetstoots mean

When you buy something, there is an implied warrantee that the thing sold is free from any defects. It is, however, possible that one can contract out of this implied warranty by inserting a term into the contract that says that the sale is voetstoots (that you buy the goods “as is” [warts and all] and cannot rely on the implied right to defect-free goods and complain later if you find certain defects in the goods).

When the seller can’t rely on the voetstoots clause

The common law does, however, allow you to cry foul and sue the seller (even if the contract contained a voetstoots clause) for cancellation of the contract or a reduction in the selling price where the goods were defective at the time of the sale, that the seller knew of the defect but failed to disclose it to the buyer, knowing full well that if the buyer knew about it he would either not have continued the purchase or would have negotiated a more favourable purchase price.

The effect of the CPA on the voetstoots clause

In terms of the CPA the consumer is entitled to receive goods that are reasonably suitable for the purpose for which they are generally intended, are of good quality, in good working order and free of any defects.

The definition of “goods” has been amplified to include a legal interest in land or other immovable property.

The CPA provides for a statutory duty of disclosure in consumer transactions. The Act expands on the common law obligation to disclose latent defects by requiring suppliers to disclose material facts and to correct misapprehensions on the part of the consumer, if failure to do so would amount to a deception.

However, sellers can exclude themselves from this obligation by advising the consumer that the goods are being offered in a certain condition. The consumer must then agree to accept the goods in that particular condition. E.g. a motor dealer should explain that the beat-up Volksie is not new, point out the obvious and not-so-obvious defects and if the consumer accepts this, then the sale would be as-is.

The only way sellers can get past the implied warranty is to describe the condition of the goods in specific detail to make it clear in which condition the goods are being sold. The buyer then has to has to “expressly agree” to accept the goods. Only if the buyer “knowingly acted in a manner consistent with accepting goods in (a less than ideal) condition” would the implied warranty of quality fall away. Every defect must be described in the contract of sale that the buyer signs.

A defect is a material imperfection that renders goods less acceptable or less practicable. This includes obvious problems, or latent defects, and those hidden future problems, or patent defects, which sellers are able to escape under the voetstoots clause provided they were not aware of such defects at the time of sale.

If any defects come to light after sale or goods do not comply with standards set out in the CPA, the buyer is entitled to return them within six months of a sale and the Act holds businesses liable to either repair or replace the goods, or to refund the purchaser. After a defective product is repaired, the repair job itself will have a further three-month warranty. In addition to these rights provided to consumers under the CPA, the CPA also provides further should any damages arise as a result of defective goods, they would be able to claim damages from the seller.

Time and case law will determine if the CPA has sounded the death knell of voetstoots clauses, but whatever its fate, the consumer is infinitely better off under the CPA.

Relocating kids from Gauteng to the Cape

A client asked me:

Been divorced for 8 years.  Dual custody over our 2 children aged 16 and 11 who reside with mother. Does the law require that the mother has to approach the court for permission to relocate from Gauteng to the Cape?

I advised him that the test is what is in the best interest of the children.

As a rule, the mother has a right to relocate with the minor children, unless a settlement agreement or a court order says otherwise. However, if the father objects, she will have to approach a court, and satisfy it that the move is sound.

Please see http://www.bregmans.co.za/relocation-with-a-minor-child-within-or-outside-south-africa/

Social Media and the Law

Social Media and the Law

Social media platforms such as Facebook, Twitter and YouTube have become an integral part of our everyday lives and have an important role to play in our social environment and help us keep in touch with others and stay informed of events around the world. Yet despite many of the benefits of social media platforms, these platforms also create opportunity for abuse and often bring out the worst in people, often without thought as to the consequences of their action.

Many people lose sight of the fact that the moment something is posted on social media sites, it is considered “published” and is therefore subject to the laws applicable to traditional media, such as newspapers. Accordingly, claims for defamation and hate speech as well as dismissal or disciplinary action for social media misconduct become very real possibilities.

Defamation

Defamation can be defined as the wrongful, intentional publication of words or behaviour in relation to another person which has the effect of injuring his status, good name or reputation.

Our courts have recently set a new legal precedent after it granted a Facebook user an interdict preventing a friend from posting about his personal life on the platform after she defamed him thereon.

In another case a woman was awarded R 40,000 in damages after claiming that her former husband and his new wife were bad-mouthing her on Facebook. The judge found that although the former husband was not the author of the postings, he was tagged in and knew about them and allowed his name to be coupled with that of his new wife thus creating liability jointly with the author of the postings.

Hate Speech

Hate speech is any speech, gesture or conduct, writing, or display which is prohibited because it may incite violence or prejudicial action against a protected individual or group, or because it disparages or intimidates a protected individual or group. The law may identify a protected individual or a protected group by disability, ethnicity, gender, nationality, religion, race, sexual orientation, or other characteristic.

Although freedom of expression is a constitutional right, it is not an absolute right. If what you say, or publish via social media platforms, has a negative impact on the rights of another, then your right to freedom of expression may be limited.

Dismissal

Disciplinary action, including dismissal for social media conduct have increased drastically over the past few years often following on the heels of comments made or posted on social media sites by employees. The Commission for Conciliation, Mediation and Arbitration (CCMA) has dealt with several of these cases where the dismissal was found to be fair based on the evidence garnered from the social media sites.

Some of the grounds for dismissals have included derogatory Facebook status updates, an employee criticising management, criticising the employer, employees using social media to convey internal matters of the business to former employees, etc.

Take note

What should you take note of when using social media to avoid legal or disciplinary action arising from your conduct on these social platforms?

• The most common defence against defamation is that the publication was true and in the public interest. Make sure about your facts before posting anything and ensure that you can back your comments with substantiating evidence and factual information. Accordingly, making a comment about a friend on a matter that is not in public interest could be defamatory even if it is true.
• Regularly check your social media profiles to ensure that your name is not being linked to defamatory statements of others.
• Do not post anything which could be regarded as incitement to cause harm based on race, religion, ethnic background, gender, sexual preference etc.
• Adhere to the social media strategy and policies of your workplace. Find out what these are, and if these are not in place, keep the following guidelines in mind:

• Keep posts legal, ethical and respectful.
• Do not engage in online activities which could harm the reputation of the company.
• Do not disclose any confidential or business information of the company.
• Do not discuss colleagues, managers or information pertaining to the company.

A good rule of thumb is to ask yourself whether you would be willing to say something out loud in a room full of people or colleagues. If the answer is no, then you shouldn’t consider posting it on social media.

Freedom of testation

Can I choose who to benefit in my will?

In South Africa, a person can leave his or her assets to whoever he likes, with few limitations. This is called “freedom of testation“. If a person dies with a valid will, he or she dies “testate”, and without a valid will, he or she  dies “intestate”.

Testate succession

An executor (the person appointed to wind up the estate) must carry out the wishes of the testator (the person making the will) as far as legally possible. The freedom of testation is limited by the common law in these situations:

·         A provision in a will shall not be executed if (a) it is generally unlawful, (b) against public policy, (c) impracticably vague, or (d) impossible; and

·         The estate is obliged to support any minor and financially dependent children.

There are certain acts that limit the testator’s freedom to choose his beneficiaries in his will, e.g.

·         In terms of the Pension Funds Act, the deceased can’t choose who to benefit. The decision will be up to the pension fund administrators;

·         A surviving spouse (who has been excluded from the will) may have a claim against the estate for maintenance in terms of The Maintenance of Surviving Spouses Act;

·         If the testator disinherits his wife, and they are married with the accrual system, the wife has a claim against his estate for ½ the difference between the accruals (if her estate is the smaller of the two).

Intestate Succession

If a person dies without a will, his or her estate is wound up in accordance with the Intestate Succession Act.

This is not a detailed exposition of the law but a mere synopsis. Contact your lawyer for comprehensive advice. 

The effect of no-interest loans to trusts

One way of avoiding estate duty and donations tax is to sell an asset to a family trust for a market related value.

The rationale is to freeze the growth of the assets in the taxpayer’s estate for estate duty purposes. The income tax benefits would accrue to the beneficiaries of the trust after the death of the taxpayer, as the income received by the trust and distributed to them would be taxed in their own hands at their respective tax rates. 

Where the problem arises, for SARS, is that the selling price of the asset is usually payable, interest-free, on loan account. Following the sale of the asset, the purchase price due by the trust is reduced every year by the taxpayer waiving R100 000 of the loan. This waiver would be exempt from donations tax and no CGT implications would arise for the trust, the debt would be reduced by way of a donation.

To close the us gap, section 7C was introduced to the Income Tax Act to address situations where assets are disposed of to a trust on interest-free loan account. The effective date is 1 March 2017, and provides that where there is an interest-free loan or a loan which is repayable at an interest rate below the official rate (currently set at 8%), the difference between the set interest rate (usually 0%) and the official rate (namely 8%) is regarded as a donation which will attract donations tax levied at a rate of 20%. 

One effect of the application of section 7C would be that any interest forgone by the taxpayer in respect of the interest free or low interest loan would be treated as an ongoing and annual donation to the trust. The good news is that natural person (or a company that is a connected person in relation to that natural person), are not precluded from employing the annual donations tax exemption of R 100,000.00 donation to the trust. If an individual donates R 100,000.00 or less, section 7C will not be applicable and no interest will be deemed to have accrued to the individual.

For larger donations, the effect may be to neutralise the historic estate planning structures.