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CONS - 1 The Consumer > CH 17 - Financial and Contractual Aspects > Flashcards

CH 17 - Financial and Contractual Aspects Flashcards

1
Q

Contract

A

An agreement that is intended to create legal rights and duties between its parties.

An agreement between two or more people in which one person offers to do something and another person accepts that offer.

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2
Q

Legal

A

Permitted by law.

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3
Q

What should you know about contracts?

A

Contract is written or spoken.
Eg. Buying food in a shop is spoken.

Written contracts require witnesses, and safer to have third party present.

Once you sign a written contract, it becomes legally binding and enforceable.
This means parties agree to terms and conditions in signed contract.

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4
Q

Breaking a contract?

A

Breaking a contract is called breach of contract.

When one party does not do what they promised to do in the contract.

Eg. If seller agrees to deliver goods and they fail to do so. He or she has breached the contract.

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5
Q

What happens if there is a breach of contract?

Legal options are:

A
  • court can order guilty party to do what was promised, fail to do so, fined or prisoned.
  • can get an interdict from court to prevent guilty person from doing something.
  • can decide to sue other party for damages.
  • can cancel contract.
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6
Q

CPA

A

Consumer Protection Act

Has specific provisions that protect the consumer in credit agreements and other contacts.

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7
Q

What does the Consumer Protection Act do?

Examples and situations - 4

A
  • forbids automatic renewal of fixed term agreements. Companies must give you options of continuing, change, or cancel contract.
  • you have right to cancel contract at any time, provided you give 20 business days notice in writing.
    You still have to pay any outstanding money you owe the company.
    You may be charged cancellation fee, no more than 10% on outstanding amount.
  • if repairs done, company must provide you with an estimate which you must approve. If more work is required, they must first get your approval.
  • CPA identifies your right to quality products, in good working order, free of defects.
    Suppliers must let you know about obvious and hidden defects.
    You must agree to the product in that condition.
    Votestoots no longer applies.
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8
Q

Important contract guidelines:

A

Terms and conditions must be explained in language you understand.

Read contracts and agreements carefully and make sure you understand.
By signing the contract you agree to follow terms and conditions, you become legally bound to fulfill contract
obligations.

Ask questions and ask for disclosure of the final cost. Including all interest.

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9
Q

Types of contracts relevant to consumers?

A

Renting, buying and building a house and credit agreement contracts such as installment sale agreements.

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10
Q

Exemptions clauses

A

Clauses included in contracts that exonerate (clear) a party from any liability should you fail to honour the agreement or when the agreed product doesn’t serve the purpose for which is was acquired.

They are legal and part of a legitimate contract.

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11
Q

Exemptions clauses have to:

A
  • cannot exclude liability for personal injury or death that results from negligence.
  • have to be reasonable (if courts thinks unreasonable, term will be void).
  • cannot exclude liability for defective goods supplied to a consumer.
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12
Q

What does the CPA say about exemption clauses?

A

An exemption clause limits the risk or liability of the supplier or requires you to indemnify the supplier for any cause:

  1. Your attention must be drawn to clause and you must agree to it at time agreement is reached.
  2. Must be written in plain language and you must be given adequate opportunity to clarify and understand the meaning of the clause.
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13
Q

Indemnify

A

Secure a person against legal responsibility for his or her actions.

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14
Q

Financial and contractual aspects to note as a consumer

A

Consumers should empower themselves with knowledge of their rights, consumer protection legislation and the many ways in which unscrupulous businesses operate.

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15
Q

Cooling-off period

A

Under the CPA, cooling-off period applies to all transactions that resulted from direct marketing.

Transactions that the consumer did not start.

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16
Q

Direct marketing

A

To approach someone, in person or by mail or electronic communication,

for the direct or indirect purpose

of promoting or supplying goods in the ordinary course of business or requesting a donation.

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17
Q

Examples of direct marketing

A
  • sales agent of cleaning or cosmetics company approaches you directly to promote products, in attempt for sale.
  • when approached through individual electronic means, SMS, marketing or emails.
  • cooling-off provision applies to all goods. Doesn’t apply to the provision of accommodation or transport.
  • cooling-off period of 5 business days to cancel in advance reservation booking or order.
  • my cancel agreement without reason without a penalty.
  • supplier must refund purchase price of goods within 15 days of receiving your notification, exercising your cooling-off right.
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18
Q

What doesn’t fall within the cooling-off provision of the CPA?

A

A supplier approaching the public, through television or the press.

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19
Q

Unfair business practices

A

Fraud, misrepresentation and oppressive or unreasonable acts against consumers.

Law prohibits them.

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20
Q

Where would unfair business practices occur?

A

In homeownership and rentals, credit agreements, consumers purchasing goods and services, insurance claims and debt collections in case or default.

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21
Q

Default

A

Failure to pay money that you owe.

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22
Q

Which two acts protect consumers against unfair marketing and business practices?

A

NCA and CPA.

National Credit Act and the Consumer Protection Act.

23
Q

Protections Acts

A

They apply to every consumer transaction occurring within Republic of South Africa.

Businesses that don’t adhere to the provisions of the NCA and CPA may be deemed unfair.

CPA outlines key consumer rights that forms basis of evaluating all businesses in SA.

24
Q

Warranty and guarantee

A

Documents to protect consumer rights.

25
Q

Warranty

A

Written promise to replace or repair an item if the item does not satisfy the terms of the warranty.

You get a warranty stating that a product is reliable and free from known defects and seller will, without charge, repair or replace defective parts within a given time limit and under certain conditions.

26
Q

Guarantee

A

A promise in writing that the quality or durability of a product or service will meet certain standards and that if it doesn’t satisfy the terms of the guarantee, the money you paid for it will be returned.

It is therefore a safeguard against loss.

27
Q

What does the CPA state about warranty’s and guarantees?

A

You may return failed, unsafe or defective goods to supplier within 6 months of delivery of goods
You have the choice of having goods repaired, replaced or refunded.

Act provides 3 months warranty on repaired goods. If defect recurs or new defect arises, supplier must replace goods or refund the price to you.

If you abuse or misuse the goods. Warranty will be void.
In addition, warranty doesn’t cover general wear and tear.

28
Q

What are grey goods or parallel imports?

A

Goods that have been imported Ito a country through unofficial or unauthorized distribution channels.

Goods are not illegal. They are imported legally and necessary duties are paid.

They fall in grey goods category because they are sold by individuals or businesses that are not authorized by the manufacturer to do so.

29
Q

Example of grey goods/ parallel imports.

A

If a new smartphone is launched and the manufacturer doesn’t allow the product to be sold in SA.

Individuals or businesses from SA, buy the goods in bulk from another country where they’re being sold, import them in SA, pay necessary duties and sell them as grey goods.

30
Q

CPA and grey goods

A

Grey goods may include, video games, wines, photographic equipment, textbooks or cars.

Under CPA, local supplier of grey imports “must display a conspicuous notice of the goods” that they are grey imports.

Grey goods have a legal warranty.
Implied warranty allows you to return goods and seller must repair, replace or refund.

31
Q

Scams

A

Fake or fraudulent business deals that are often linked to organized crime

32
Q

Examples of scams (5)

A 
Online scams 
Credit card fraud
Identity theft 
Work-from-home scams
419 scams
33
Q

Online scams

A

Internet is an ideal place for fraudulent operators

Online scams include:
Phishing
Lottery scams

34
Q

Phishing

A

Phishing - attempts to get someone’s secret bank info.

Phishing emails are fake emails that pretend to be from banks.
Emails asked you to clink on link and change your personal details. Link is a fake website, tricks you it’s giving your credit card no. Account username and password.

They then empty your credit card.

35
Q

Lottery scams

A

Receive and SMS or email, stating you have won a lottery jackpot and before claiming your prize your prize, you must deposit a sum of money into the lottery a fictitious bank account.

36
Q

Spam

A

Unwanted emails sent to a large number of people

37
Q

Tips to protect yourself against online scams.

A
  • suspect fake emails or spam, delete without opening.
  • keep anti-spam and anti-virus software up to date on your computer.
  • never give personal details by email.
  • never open attachments on emails to claim to come from your bank. They could contain spyware that can track your keystrokes/ details.
  • check you bank and credit acc statements regularly.
  • if you think you have your details to a phisher, contact financial institution or credit card company immediately.
38
Q

Black market goods

A

Goods illegally imported into SA without payment of any customs duties.

It’s illegal to deal in black market goods. They are usually counterfeit goods. Which include forgeries of currency and imitations of items such as works of art, toys, clothing, watches or logos. Which results in patent and trademark infringements.

39
Q

Credit card fraud

A

A credit card is a convenient method of payment, but it does carry risks.

There is a chance that you might become a victim of credit card fraud.

40
Q

Credit cards or informations can be obtained through 5 methods:

A
  • Card swopping at ATMs.
  • Theft or pickpocketing.
  • Fake websites.
  • Emails claiming to be from credit card service provider (phishing).
  • Card skimming, illegal copying of info front eh magnetic strip on credit or ATM cards. This can create fake or cloned cards with your details.
41
Q

Credit card fraud guidelines:

A
  • never leave your card unattended.
  • ensure you get your card back after all transactions.
  • destroy expired cards and sign new ones immediately.
  • report lost or stolen cars asap.
  • protect pin by memorizing it.
  • don’t keep pin and card in same place.
  • be careful when giving personal info to unknown people.
  • destroy all financial info, acc no.’s, statements, receipts.
  • verify transactions on credit transactions and receipts.
42
Q

Identity theft

A

Crime where criminal obtains key pieces of personal info, such as ID or drivers license numbers to pose as someone else.

Info can be used to gain access to your accounts. To open new ones I. Your name or to obtain goods and services using your name.

Can also give criminals false credentials for immigration.

43
Q

Work-from-home scams

A

Target people seeking extra income.
They done help you make money but trick you to take your money and leave you with nothing.

Eg. An advert requests you to start your own business from home, on responding they ask you to deposit money into the promoters acc as registration fee.

SA law says they are illegal and may not appear bin magazines or newspapers.

44
Q

419 scams

A

Way of obtaining money from unsuspecting consumers.

419 - money laundering schemes

Scam originates from Nigeria and is internationally known as the 419 scam because this is the no. of the section of the Nigerian penal code that deals with this kind of fraud.

Scam plays on your emotions. Appeals to your moral instincts. You led to believe you all make lots of money.

45
Q

Money laundering

A

Hiding the true nature or source of illegal money.

Money his laundered by passing through legitimate business channels by means of bank deposits, investments or transfers.

46
Q

Stokvels

A

Kind of saying club.

Consists of a group of people who have joined together to pledge regular contributions to a common fund from which each member can draw, for specific purposes.

47
Q

Stokvel example

A

The money pooled is awarded to each member in turn to enable him/her to make a large cash purchase, such as putting down a deposit for a home.

48
Q

Facts on Stokvels

A
  • legal institutions. Way of forcing yourself to put away a bit of money each money and serve as a support network.
  • only get involved if you trust the other members.
  • make sure the Stokvel has clear rules about how much money each person must invest, how the money will be invested, where and how often meeting will be held, how often payments will be made, when it will be your turn to benefit from the money.
49
Q

Pyramid schemes

A

They are “get rich quick” money-making schemes that take the form of a pyramid.

They promise participants payments just for enrolling other people into the scheme, rather than supplying any real investment or selling products or services to the public.

50
Q

How does a pyramid scheme work?

A

One person at top of pyramid (the initiator). Who recruits people rob invest in the scheme.

Each of the people recruited, then recruits more people, so number grows from a single person at the top, through layers to a large number at the base.

This is how people make money, because the initiator gets paid fees by every person in the scheme.
These schemes can’t go on forever because there is a limited amount of people to recruit.
Most people who invest, loose their money.

51
Q

What does the CPA say about pyramid schemes?

A

Pyramid schemes are unfair trade practices and are illegal in SA.
CPA states that you aren’t allowed to join a pyramid scheme.
If you loose your money the law won’t protect you.

52
Q

What are MLM schemes?

A

MLM - Multilevel marketing schemes, require that you recruit not only to buy and sell a product, but who will also recruit other people for a commission.

Operate just like pyramid schemes but are legal. They involve real products and income is derived from sales of those products to outside parties.

53
Q

How do you know if a company is operating a pyramid scheme?

A

The company or scheme will concentrate on the commission that participants earn for recruiting members. They ignore marketing or selling of an actual product.

CONS - 1 The Consumer (5 decks)

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