Liability for Products in the Consumer Protection Bill 2006: A Comparative Critique

• Jurisdiction: South Africa
• Citation: (2006) 17 Stell LR 412
• Published date: 27 May 2019
• Pages: 412-453
• Date: 27 May 2019

LIABILITY FOR PRODUCTS IN THE CONSUMER

PROTECTION BILL 2006: A COMPARATIVE

CRITIQUE

*

Max Loubser

BA LLD D Phil (Oxon)

Professor in Private Law, University of Stellenbosch

Elspeth Reid

MA LLB DipLP

Senior Lecturer in Law, University of Edinburgh

Solicitor

1 The background to reform

The Draft Consumer Protection Bill, recently published by the

Department of Trade and Industry,

1

encapsulates a vision for a ‘‘new

consumer law’’,

2

which has as its objective the establishment of ‘‘a fair,

accessible and sustainable marketplace for consumer products and

services’’.

3

The cultural change necessary to address South Africa’s lack

of ‘‘a vibrant and strong consumer movement’’

4

requires to be under-

pinned by legal certainty and accessibility. This is particularly important

in areas of liability ‘‘characterised by imbalances in information and

bargaining power between businesses and consumers’’.

5

An important

dimension to the proposed reform is therefore the creation of a strict

liability framework to provide redress for consumers who have suffered

harm due to defects in products. Until now, a consumer who was injured

or who sustained property damage because of a safety defect in a product

obtained redress from the producer or distributor only where it could be

proved that the latter was at fault. Only three years ago, the Supreme

Court of Appeal confirmed the fault requirement in relation to the

manufacture, sale or distribution of goods and concluded that ‘‘if strict

liability is to be imposed it is the legislature that must do it’’.

6

In section

* The authors wish to record their thanks to the British Council and the Association of Commonwealth

Universities who awarded them a Grant for International Collaboration to support work on this

project; as well as to the University of Stellenbosch for a research grant; and to Anita Moolman, who

rendered valuable research assistance to the project.

1

At http://www.dti.gov.za/ccrdlawreview/DraftConsumerProtectionBill.htm.

2

As originally unveiled by the Department of Trade and Industry in its 2004 Green Paper on the

Consumer Policy Framework (at http://www.dti.gov.za/ccrdlawreview/conslawreview.htm).

3

Preamble to the Bill.

4

Green Paper 7.

5

Green Paper par 1.3. On the need to modernise consumer law in order to maintain consumer confidence

see, eg, the UK White Paper Modern Market: Confident Consumers (1999) esp ch 6 at http://

www.dti.gov.uk/ccp/topics1/pdf1/consumerwp1999.pdf.

6

Wagener & Cuttings v Pharmacare Ltd 2003 4 SA 285 (SCA) per Howie JA par 38.

412

(2006) 17 Stell LR 412

© Juta and Company (Pty) Ltd

71 of the Bill, South Africa institutes a strict liability framework for

compensation.

With the introduction of strict liability for products, South Africa will

be brought into line with many other jurisdictions in the developed and

developing world.

7

Whereas products liability was previously not

regarded as a discrete category, the trend towards making separate

provision gathered pace in the second half of the 20th century, reflecting

an increased interest in broadening access to justice for consumers. In the

1960s, the American Restatement (Second) of Torts }402A, provided the

model for a distinct body of rules imposing liability on producers without

subjecting the consumer to the exacting requirement of proving that the

manufacturer was at fault.

8

Following the Restatement lead, many

jurisdictions moved in the direction of strict, or stricter, forms of liability

specifically for products. A landmark was reached in 1985 with the EC

Directive on Product Liability

9

in implementation of which the member

States of the European Union have introduced statutory frameworks for

strict liability. This has been used extensively as a model, for example in

the relevant sections of the Australian Trade Practices Act 1974, in the

Pacific Rim generally, and in Latin America.

10

Meanwhile, in the United

States, the continuing debate as to the appropriate level of liability for

products culminated in }2 of the 1998 US Restatement Third, Torts:

Products Liability, which in effect combines a strict liability regime for

certain types of product defect and fault-based liability for others. These

developments form the background to analysis of the proposed South

African legislation.

The framework chosen for South Africa appears to follow closely the

European Directive. A strict liability regime is adopted, which makes no

overt mention of fault, and indeed much of the wording appears to derive

from the Directive and the UK Consumer Protection Act, 1987 based

upon it. Given, however, that the experience of consumers in Europe, 20

years after the Directive, has been mixed, the essential question is whether

the draft South African provisions can achieve their stated goal of

establishing an effective system of redress for consumers.

11

7

See the United Nations Guidelines for Consumer Protection, adopted in 1985 by Resolution 39/85

(available at http://www.un.org/esa/sustdev/publications/consumption_en.pdf). The Guidelines aim to

achieve adequate protection for consumers in all countries, ‘‘recognizing that consumers often face

imbalances in economic terms, educational levels and bargaining power; and bearing in mind that

consumers should have the right of access to non-hazardous products’’. There are many dimensions to

the legal protection envisaged, but two of the prime objectives are ‘‘the protection of consumers from

hazards to their health and safety’’ and ‘‘the promotion and protection of the economic interests of

consumers’’.

8

For a comparison of European and Anglo-American perspectives on product liability prior to the

1960s, see Whittaker Liability for Products (2005) 5-6.

9

Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and

administrative provisions of the member States concerning liability for defective products, OJ 1985

L210/29.

10

For an overview of international developments see Reimann ‘‘Liability for Defective Products at the

Beginning of the Twenty-first Century’’ 2003 51 AmJCompL 751 756 et seq.

11

S 3 of the Bill.

LIABILITY FOR PRODUCTS 413

© Juta and Company (Pty) Ltd

2 What kind of liability is provided for?

Section 71(1) of the Bill provides that:

‘‘Any producer, distributor or supplier of a good is strictly liable for any damage, as described

in subsection (2), caused wholly or partly as a consequence of a product failure, defect or

hazard in a good, or as a result of inadequate instructions or warnings provided to the

consumer, and if in a particular case, more than one person is liable in terms of this subsection,

their liability is joint and several.’’

A ‘‘defect’’ is defined in section 1 as

‘‘any characteristic of a good, component of a good, or aspect of a service supplied to a

consumer, that renders the good, component, or service less useful, practicable or safe than

persons generally are entitled to expect, having regard to the circumstances of the transaction’’.

Thus the liability of producers, distributors and suppliers towards

persons suffering damage as a result of a product failure or defect is

clearly not limited to parties in a contractual relationship, and section

71(1) utilises concepts associated with the law of delict, albeit not

exclusively; such as strict liability, damage, causation and joint and

several liability. To be properly understood in the context of this section,

these concepts require analysis in terms of the common law, in particular

the law of delict, as discussed further below.

Most jurisdictions now regard product liability as a discrete area of

delict or tort. The law of contract governs only actions by a purchaser in

a direct contractual relationship with a producer or distributor.

12

The

move from contract to tort in American product liability cases has been

described as follows by Traynor J in Greenman v Yuba Power Products

Inc:

13

‘‘A manufacturer is strictly liable in tort when an article he places on the market, knowing that

it is to be used without inspection for defects, proves to have a defect that causes injury to a

human being. Recognised first in the case of unwholesome food products, such liability has

now been extended to a variety of other products that create as great or greater hazards if

defective. Although in these cases strict liability has usually been based on the theory of an

express or implied warranty running from the manufacturer to the plaintiff, the abandonment

of the requirement of a contract between them, the recognition that the liability is not assumed

by agreement but imposed by law, and the refusal to permit the manufacturer to define the

scope of its own responsibility for defective products make clear that the liability is not one

governed by the law of contract warranties but by the law of strict liability in tort. Accordingly,

rules defining and governing warranties that were developed to meet the needs of commercial

transactions cannot be invoked to govern the manufacturer’s liability to those injured by their

defective products unless those rules also serve the purposes for which such liability is

imposed.’’

An action in delict thus ‘‘short-circuits’’ the need for successive actions

for breach of contract by the consumer against the retailer; the retailer

against the wholesaler, and so on. The action in delict also obviates the

12

Reimann ‘‘Product Liability in a Global Context: The Hollow Victory of the European Model’’ 2003 2

European Review of Private Law 128 144.

13

377 P 2d 897 (1963) 901.

414 STELL LR 2006 3

© Juta and Company (Pty) Ltd