1.
Introduction
Prior
to 2013, Kenya had no specific law dealing with consumer protection but rather,
consumers were protected through piece-meals in various pieces of legislation.
In 2013, the Consumer Protection Act[1]
came into effect pursuant to the provisions of Article 46 of the Constitution[2]
which provides that consumers have a right to the following: - (i) goods and
services that are of reasonable quality; (ii) information that is necessary for
them to gain full benefit from the goods and services; (iii) to their health protection,
safety and economic interests; and lastly to compensation for loss
or injury arising from the defects in goods and services.
The
Consumer Protection Act (hereinafter to be referred to as CPA) affects
different sectors of the Kenyan economy including real estate, ecommerce,
manufacturing, agriculture, banking and finance, aviation, among many others.
This paper will seek to look into how the Act has provided for consumer
protection in the country.
2.
Purpose
of the CPA
The
purpose of the Consumer Protection Act as laid down under Section 3(4) is to
promote and advance the social and economic welfare of consumers in Kenya. This
is to be achieved through:-
(a)
Establishing a legal framework meant to achieve and maintain a consumer market
that is fair, accessible, efficient, sustainable and responsible for the
benefit of consumers generally.
(b)
Reducing and ameliorating any disadvantages experienced in accessing any supply
of goods or services by consumers.
(c)
Promoting fair and ethical business practices.
(d)
Protecting consumers from all forms and means of unconscionable, unfair,
unreasonable, unjust or otherwise improper trade practices including deceptive,
misleading, unfair or fraudulent conduct.
(e)
Improving consumer awareness and information and encouraging responsible and
informed consumer choice and behavior.
(f)
Promoting consumer confidence, empowerment and the development of a culture of
consumer responsibility, through individual and group education, vigilance,
advocacy and activism.
(g)
Providing a consistent, accessible and efficient system of consensual
resolution of disputes arising from consumer transactions; and
(h)
Providing for an accessible, consistent, harmonized, effective and efficient
system of redress for consumers.
3.
How
the Consumer Protection Act (CPA) provides for Consumer Protection.
3.1 Who
is a Consumer?
According
to the CPA a “consumer” is broadly defined to include not only the person who
buys the goods or services but also a person who uses the goods or services
irrespective of whether they were party to the transaction or not. [3]
3.2 Part II: Rights of a Consumer.
Part II of the CPA gives
consumers a wide range of rights including the right to commence legal action
on behalf of a class of persons in relation to any contract for the supply of
goods or services to the consumer. The right to commence legal action cannot be
ousted by any agreement between the parties.[4] Other consumer rights provided for in the
Act include the right to full
pre-contractual information for the consumer to make an informed choice, the
right to complain with regard to quality, delays in provision of rectification,
quantity and price of such goods or services as are offered and the right to a
reasonable notification of termination of service.
On
implied warranties, a supplier of goods and services under section 5(1) of the
Act is deemed to warrant that the goods and services supplied under a consumer
agreement are of reasonably merchantable quality. The Act is also clear on the
fact that the implied conditions and warranties that apply to the sale of goods
under the Sale of Goods Act[5]
shall apply with necessary modifications to goods that are leased, traded or
otherwise supplied under a consumer agreement. Further, that any provision, whether it is part of the
consumer agreement or not, and it purports to negate or vary any implied condition
or warranty provided under the Sale of Goods Act or under this Act shall be
considered to be void.
Section
6 (1) clearly points out that if a consumer agreement includes an estimate[6],
the supplier shall not charge the consumer an amount that exceeds the estimate
by more than ten per cent. Thus, if a supplier of goods or services provides an
estimate, he cannot charge the customer an amount that exceeds 10% of the
estimate he’s provided, unless additional or different goods or services are
provided.
If
there are any ambiguities in a consumer agreement (including oral agreements),
that allow for more than one reasonable interpretation, they shall be
interpreted in favour of the consumer.[7]Advertisement
(including sponsorship relationships) on internet gaming sites that are
operated contrary to the law is prohibited. A person will only be allowed to
advertise an internet gaming site only if the advertising originates in Kenya
or is primarily intended for Kenya residents.
3.3 Part III: Unfair
practices.
Part III of the Act protects consumers from unfair
practices. Section 16 allows the consumer to cancel the
agreement in the event of an unfair practice. The Act has given a
very wide interpretation of what is deemed to be an unfair practice. According
to the Act, unfair practices will include:
i)
Making false, misleading or deceptive representations[8],
for instance, representing that goods or services have a sponsorship, approval,
performance or characteristics that they do not have; or representing that goods
or services are of a particular standard or quality and they are not, just to
name a few.
ii)
Making an unconscionable representation[9]
and this will be determined based on whether the person making the
representation knows:
a.
that the consumer is not
reasonably able to protect his interests due to disability, ignorance,
illiteracy or inability to understand language;
b.
the price grossly exceeds
the price at which similar goods or services are readily available to like
consumers; and
c.
The consumer is being
subjected to undue pressure to enter into the transaction.
In the event a consumer is faced with an unfair
practice, the Act has provided for different sanctions in their favour. First, a consumer has a right to terminate an agreement and sue
for damages where the consumer is aware that the other person engaged in an
unfair practice. Where a consumer terminates an
agreement, such termination also operates to terminate the following additional
agreements, as if they never existed (i) all related agreements (ii) all
guarantees issued in respect of monies payable under the agreement (iii) all
securities given by the consumer or a guarantor and (iv) all loan agreements
including promissory notes.[10]
Secondly,
the Act allows admissibility of oral evidence court in determining the
existence of any unfair practice or representation that is unconscionable
notwithstanding the existence of a written contract.[11]The
courts have also been expressly permitted by the Act to award exemplary or punitive
damages in addition to any other remedy that will have been available to the
consumer pertain to an action commenced on basis of unfair practices.[12]
3.4 Part IV: Rights and Obligations Respecting Specific Consumer Agreements.
For
future performance contracts, section 18 is clear that the agreement shall be
in writing made in accordance with the prescribed requirements and it shall be
delivered to the consumer. Upon default in payment by a consumer, no
repossession or right to resell the goods already sold may be undertaken
without leave of the court if more than two thirds of the consideration has
already been paid by a consumer.[13]
Any agreement including a security agreement under which the supplier may
retake possession is not enforceable.
Section
31 (1) provides for disclosure
of information in an internet agreement. A supplier who enters into an
agreement over the internet for the supply of goods or services is required to
disclose certain prescribed information. In addition, s/he must provide the consumer
with an express opportunity to accept or decline the agreement or to correct
errors before entering into the contract. The agreement is to be delivered to
the consumer in writing within the prescribed time. A consumer
may however cancel the agreement at any time from the date the agreement was
entered into until seven days after the consumer receives a copy of the
agreement if-
(a)
The supplier did not disclose to the consumer the information required under
section 38 (1);or
(b)
The supplier did not provide to the consumer an express opportunity to accept
or decline the agreement or to correct errors immediately before entering into
it.
3.5 Part VI: Repairs to motor vehicles and other goods.
Save
for certain defined circumstances a repairer of motor vehicles may only charge
the consumer for work or repairs that the repairer had initially given an
estimate of charges to the consumer.[14]
A repairer may only charge for work or repairs that were authorized by the
consumer[15]
and he cannot charge for work or repairs for which an estimate was given, an
amount that exceeds the estimate by more than ten per cent. Section 49(1)
points out that a repairer shall offer to return to the consumer all parts
removed in the course of repairs and shall only keep such parts where the
consumer agrees that he does not need their return.
3.6 Part VII: Credit Agreements
This
part of the CPA specifically deals with credit agreements. The Act in this
particular part has set the ball rolling in the banking and finance industry in
that the provisions seek to afford a consumer with sufficient protection in
relation to credit agreements. According to the Act a credit agreement is
basically a consumer agreement under which a lender extends credit or lends
money to a borrower but does not include a facility under which a lender
extends credit or lends money on the security of a mortgage over real property.[16]
This means that to the extent that the facility agreement is unsecured it
would constitute a “credit agreement” for the purposes of this Act.
Headline
items covered by the Act in favour of consumers include pre-payment charges[17]
where a borrower is entitled to pay the full outstanding balance under a credit
agreement at any time without any prepayment charges or penalties. A borrower
is also entitled to prepay a portion of the outstanding balance on any
scheduled repayment date or on a monthly basis without prepayment charge or
penalty.[18]
Furthermore where a borrower repays the full outstanding amount of a fixed
credit, the lender is obliged to refund a portion of the cost of borrowing
excluding (i) interest payments and (ii) prescribed charges (which have not yet
been prescribed).
Section
60 points out that where a lender invites a borrower to defer making payment
the lender must disclose whether or not interest would accrue on the unpaid
amount and if such interest is accruing the lender must disclose the interest
rate, in the absence of which the lender is treated as having waived the
interest.
Default
charges have been prohibited under section 61. A lender is not entitled to
charge default charges other than (i) legal costs that the lender incurs in
collecting a payment required by the borrower, (ii) reasonable charges in
respect of costs including legal costs, that the lender incurs in realising a
security interest or protecting the subject matter of the security interest
after default under the agreement or (iii) reasonable charges that the lender
incurs due to a payment instruction issued by the borrower being dishonoured.
Prior
to a borrower entering into a credit agreement, a lender will be required to
deliver to the borrower an initial disclosure statement for the credit
agreement and such disclosure statement will contain such information as shall
be prescribed.[19]
Under
subsequent disclosure requirements the Act is clear that where the interest
rate in a credit agreement is a floating rate, the lender shall at least once
every 12 months deliver a disclosure statement to the borrower disclosing the
prescribed information (this information has not yet been prescribed). In the
case of open credit, a disclosure statement is to be issued once monthly.[20]
3.7 Part VIII: Leasing
Consumers
are protected by being entitled to disclosure statements. Where a lease is (i)
for a period of four months or more or (ii) for an indefinite term or capable
of being renewed automatically unless one party takes positive steps to
terminate the lease or (iii) the lease has residual obligations then the
landlord is required to deliver a disclosure statement for lease to the tenant
prior to (a) the tenant entering into the lease or the time the tenant makes
any payment in connection to the lease, whichever occurs earlier. The
disclosure statement is to contain the prescribed information (this information
is yet to be prescribed).
3.8 Part IX – Procedures For Consumer
Remedies
Section
76 requires a consumer to give notice to a supplier to request a remedy in
accordance with this section. The notice may be expressed in any way, as long
as it indicates the intention of the consumer to seek the remedy being
requested and complies with any requirements that may be prescribed. The notice
may be oral or in writing and may be given by any means unless the regulations
require otherwise.
Consumer
agreements shall not be binding on the consumer unless the agreement is made in
accordance with this Act and the Regulations. However, a court may order that a
consumer is bound by all or a portion of a consumer agreement, if the court
determines that it would be inequitable in the circumstances for the consumer
not to be bound.[21]
If a
consumer is entitled to a right to commence any action whatsoever under this
Act, s/he may commence the action in the appropriate Court.
Where in the said action the consumer is successful, unless in the
circumstances it would be inequitable to do so, the court shall order that the
consumer recover the full payment to which he or she is entitled under this
Act; and also, all goods delivered under a trade-in arrangement or an amount
equal to the trade-in allowance.[22]
Where
a consumer is required to give notice under this Act in order to obtain a
remedy, a court may disregard the requirement to give the notice or any
requirement relating to the notice if it is in the interest of justice to do
so. This is in spirit of section 85 of the CPA.
Section
88 provides that any term or acknowledgment in a consumer agreement that
requires that disputes arising out of the agreement be submitted to arbitration
is invalid insofar as it prevents a consumer from exercising a right to
commence an action in the High Court given under this Act. However, after a
dispute over which a consumer may commence an action in the High Court arises,
the consumer, the supplier and any other person involved in the dispute may
agree to resolve the dispute using any procedure that is available in law. A
settlement or decision that results is as binding on the parties as it would be
if it were reached in respect of a dispute concerning an agreement to which this
Act does not apply.
3.9 Part X:
The Kenya Consumers Protection Advisory Committee
Finally,
the Act establishes the Kenya Consumers Protection Advisory Committee [23]that
shall aid in the formulation of policy related to consumer protection, accredit
consumer organisations, advise consumers on their rights and responsibilities,
investigate complaints and establish conflict resolution mechanisms amongst
other duties.
4.
Conclusion.
The
Consumer Protection Act, ushers in a new dawn for consumer protection in Kenya.
Being still in its infancy, it will take some time for its full effects to be
experienced but undoubtedly suppliers will need to be more conscious of
consumer rights.
[1] No.46 of 2012.
[2] It discusses
consumer rights and in particular Article 46(2) provides that Parliament shall enact
legislation to provide for consumer protection and for fair, honest and decent
advertising.
[3] Section 2
[4] Section 4(1)
[5] Cap 31, Laws of Kenya.
[6] An estimate is how much the seller thinks the job will cost. The actual price may
be more or less, but it shouldn't be too much more.
[7] Section 7
[8] Section 12(1)
[9] Section 13(1)
[10] Section 16(12)
[11] Section 16(8)
[12] Section 16(9)
[13] Section 21(1)
[14] Section 44 (1)
[15] Section 46(1)
[16] Section 2
[17] Section 62
[18] Section 62(3)
[19] Section 65
[20] Sections 67 and 68
[21] Section 77
[22] Section 84
[23] Section 89(1)
very helpful
ReplyDeleteWell explained.
ReplyDeleteVery helpful indeed