Man­u­fac­tur­ers will soon be strictly li­able for de­fec­tive prod­ucts

Finweek English Edition - - Companies & Markets -

WHEN the new Con­sumer Pro­tec­tion Bill be­comes law later this year, man­u­fac­tur­ers will be held strictly li­able for de­fec­tive prod­ucts sold into the South African mar­ket.

This will em­power all South Africans to sue man­u­fac­tur­ers for dam­ages, bring­ing South Africa (SA) in line with ju­ris­dic­tions like the United States, the United King­dom and Aus­tralia.

This is ac­cord­ing to Eric Leven­stein, a di­rec­tor at lead­ing SA law firm Werks­mans at a re­cent fo­rum event hosted by the Univer­sity of Pre­to­ria’s Gor­don In­sti­tute of Busi­ness Science.

The new leg­is­la­tion, which pro­motes a fair, ac­ces­si­ble and sus­tain­able mar­ket­place for con­sumer prod­ucts and ser­vices, en­trenches ev­ery con­sumer’s right to pur­chase prod­ucts that are of fair value, good qual­ity and safe.

Leven­stein said the num­ber of claims from con­sumers seek­ing to re­dress the harm caused by de­fec­tive pur­chased prod­ucts will in­crease dra­mat­i­cally, since con­sumers will no longer have to prove it was the man­u­fac­turer’s fault.

This lifts a costly and ma­jor ev­i­den­tial bur­den. His­tor­i­cally, con­sumers had to prove “wrong­ful­ness”, which meant:

The man­u­fac­turer did not ful­fil a le­gal duty to rea­son­ably pre­vent de­fec­tive prod­ucts from reach­ing the mar­ket; and It was the man­u­fac­turer’s fault due to neg­li­gence. “The most dif­fi­cult el­e­ment to prove is that dam­ages caused are the man­u­fac­turer’s fault,” he noted.

For a con­sumer to suc­ceed in a prod­uct li­a­bil­ity claim against a man­u­fac­turer, he/she had to prove that the de­fect was due to neg­li­gence on the part of the man­u­fac­turer.

“So, one would have to show that the man­u­fac­turer was care­less in the man­u­fac­tur­ing process. This kind of ev­i­dence is sim­ply not avail­able to the con­sumer,” he said.

Strict li­a­bil­ity, which is in­tro­duced in sec­tion 61 of the Bill, states that any pro­ducer, im­porter, dis­tributer or re­tailer of a good is li­able for any harm wholly or partly as a con­se­quence of: • A prod­uct fail­ure, de­fect or haz­ard in a good; or In­ad­e­quate in­struc­tions or warn­ings pro­vided to the con­sumer per­tain­ing to any haz­ard aris­ing from the use of such goods. Leven­stein said there is a strong case for im­pos­ing strict li­a­bil­ity on all man­u­fac­tur­ers, whether they are con­trac­tu­ally linked to con­sumers or not. The fol­low­ing sup­ports this ar­gu­ment: • Ad­ver­tis­ing and mar­ket­ing de­vices used

by man­u­fac­tur­ers, such as trade marks, lull

• con­sumers into a false sense of se­cu­rity con­cern­ing prod­uct qual­ity. Con­sumers lack the means and skills to in­ves­ti­gate the sound­ness of the prod­uct.

The Bill cat­e­gorises the types of prod­uct de­fects as fol­lows:

Harm­ful in­gre­di­ents For­eign ob­jects De­te­ri­o­ra­tion be­fore sale Poor de­sign Poor prepa­ra­tion Lack of proper in­struc­tions or warn­ing Poor pack­ag­ing. Sec­tion 52(2) of the Bill re­quires man­u­fac­tur­ers to pack­age goods in a way that clearly dis­plays on or within the pack­ag­ing a no­tice that pre­scribes stan­dards and pro­vides the con­sumer with ad­e­quate in­struc­tions for the safe han­dling and use of those goods.

Leven­stein said all pur­chased prod­ucts will now come with im­plied war­ran­tees of qual­ity, not just spe­cific war­ran­tees against de­fects. This means ev­ery con­sumer will be en­ti­tled to buy prod­ucts that are: • Rea­son­ably suited to their orig­i­nally in­tended pur­poses Of good qual­ity In good work­ing or­der Free from de­fects.

The Bill is de­signed to:

Pro­mote con­sumer con­fi­dence and em­pow­er­ment De­velop a cul­ture of con­sumer re­spon­si­bil­ity through in­di­vid­ual and group ed­u­ca­tion, vig­i­lance, ad­vo­cacy and ac­tivism Im­prove con­sumer aware­ness and in­for­ma­tion En­cour­age re­spon­si­ble and in­formed con­sumer choice and be­hav­iour Pro­vide for con­sis­tent, ac­ces­si­ble and ef­fi­cient sys­tems of con­sen­sual res­o­lu­tion of dis­putes and sys­tems of re­dress for con­sumers. The Bill states, “Ex­ist­ing pro­vi­sions re­lat­ing to the pro­tec­tion of con­sumers in SA are frag­mented, out­dated and mostly in­cor­po­rated in leg­is­la­tion that is merely in­ci­den­tal to con­sumer pro­tec­tion. They are also based on prin­ci­ples that are no longer ap­pli­ca­ble to the val­ues of a de­vel­op­ing demo­cratic so­ci­ety.”

“This has re­sulted in un­even reg­u­la­tion with heavy reg­u­la­tion in some in­dus­tries and self-reg­u­la­tion in oth­ers. This leaves con­sumers and, in par­tic­u­lar, small busi­nesses, vul­ner­a­ble to wide­spread abuse.”

There are cur­rently no gen­eral rules of law re­lat­ing to the con­sumer’s most ba­sic rights to in­for­ma­tion, dis­clo­sure, fair­ness and trans­parency.

The cur­rent leg­isla­tive frame­work does not ad­dress the chal­lenges of dis­crim­i­na­tory and un­fair mar­ket prac­tices, the pro­lif­er­a­tion of low qual­ity and un­safe prod­ucts, con­sumers’ lack of aware­ness of rights, in­ad­e­quate pro­tec­tion and lim­ited re­dress, as well as weak en­force­ment sys­tems.

“The ar­rival of the Bill will un­doubt­edly rev­o­lu­tionise the way in which busi­ness is done in SA,” said Werks­mans di­rec­tor Neil Kirby.

Eric Leven­stein

Neil Kirby

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