Friday, July 23, 2010

The Consumer Protection Act sets up an extensive administrative structure for the protection of consumers, with numerous provisions dealing with the obligations that businesses have, and, also, actions that they may not take. One of the obligations that will apply is that a person providing goods or services to consumers will be allowed to conduct business only under specific names (section 79(1)). A number of scenarios are envisaged by Act.
Firstly, a person may conduct business under his full name, as disclosed in his identity document, in the case of an individual, or, in the case of a juristic person, if it has been registered in terms of a “public regulation”.
The second situation is where a business name is registered in terms of the Consumer Protection Act, or any other public regulation. The term “public regulation” includes national legislation and probably refers to legislation such as the Companies Act. The term “business name” refers to a name under which a person carries on business (other than the person’s full name) and also specifically relates to the registration of a business name “for the use” thereof. This raises the question as to the treatment of  “trading as” entities.
Section 79(1) of the Act indicates, as far as corporate entities are concerned, that one may trade under (a) one’s registered company name (eg XYZ Franchises (Pty) Ltd) or (b) another registered business name.  In the “trading as…” case one seems to be working with a “business name”.  It should be borne in mind that there is no general restriction on the use of the phrase “trading as…”, assuming of course that the name following the phrase “trading as”, is duly registered in terms of the Act. For example: to comply with the Act, an entity may conduct business in the name of “XYZ Franchises (Pty) Ltd”, its registered company name. If such registration has taken place one then deals with a registration that exists under a “public regulation”, as described above.   However, where the company conducts business under a different name, such name must be registered.  In other words, where XYZ Franchises (Pty) Ltd is active in the market as “XYZ Franchises (Pty) Ltd trading as Popcorn Den”, then “Popcorn Den” must be considered for registration as the business name of XYZ Franchises (Pty) Ltd.  In this way there is transparency from the point of view of the consumer, in line with his right to have information about traders. The right to information is a specific objective of the Act. This does however create a potential difficulty, as the trading name used by the franchisee is probably the registered trade mark of the franchisor. 
The position regarding the use of one’s own name is that if it is a natural person that is involved, registration would not be necessary, if the person’s full names are used. This could apply, depending on the facts, to partnerships as well. Incidentally, the use of a person’s name, if it is bona fide, and consistent with fair practice, could also constitute an exemption from infringement in terms of the Trade Marks Act. It is said that one has a right to use your own name to conduct trade. This is however subject to the condition that the use must be bona fide, and it must not result in confusion or deception amongst consumers. What does the term “full name” mean? In the decision of South African Breweries v Namibia Breweries, it was held that it is sufficient if the name “Hansa Brauerei” is used, instead of Hansa Brauerei Limited. Another decision that is of interest is Chickenland (Pty) Ltd v FA Bras t/a Fernando’s Chicken House & Taverna. Here a person relied on the fact that his first or Christian name was Fernando. The court held that a first or Christian name was not sufficient to qualify for protection, and a surname would have to be added.
If business is conducted under any other name than those set out above, the National Consumer Commission may issue a compliance notice, with the effect that business must be discontinued under that name. The provisions of the Act regarding business names are set to enter into force on a date yet to be proclaimed, but such date, in terms of the Act itself, will not be earlier than October 2011.
In the next discussion the principles of the Act relating to the names which may be chosen will be set out.