Product Liability risks have seen significant changes as a result of the introduction of the Consumer Protection Act, 68 of 2008, which came into operation on 31 March 2011.
The main objective of the above Act is to protect consumers from hazards and to provide effective remedies for consumers who buy defective or unsafe products.
The Act opens new avenues for consumers to institute product liability claims against producers, importers, distributors, retailers or installers of goods. Such claims may arise from the supply of unsafe goods, product failures, defects in goods, and failure to provide adequate instructions or warnings to consumers about hazards arising from or associated with the use of the product.
Product liability claims may now be instituted by a variety of persons, not only the person who has suffered direct harm as a result of the product, and there is no restriction on the kind of loss that may be recovered.
The wide application of the Act holds serious risks for all persons or businesses in the supply chain. These risks include limited opportunity to raise traditional defences as the Act contemplates “strict” liability. It is therefore no longer necessary for consumers to prove negligence or fault, and consumers may hold any person or business in the supply chain liable for any damage suffered.
On the other side of the coin, the Act provides significant protection to consumers who, in the past, were offered little recourse for the damages they suffered as a result of inadequate, hazardous or defective products.
Our client base includes local and international insurers and underwriters exposed to product liability risks carried by producers, importers, distributors and retailers in the chemical, construction, engineering, industrial, mining and quality assurance and certification sectors. We have also advised clients who have suffered loss due to hazardous or defective products and assisted them in pursuing claims to recover same.
Some of our exposure includes:
- Advising insurers in a matter involving product liability, where the insured suffered damages due to a fire caused by electrical equipment;
- Advising insurers of a chemical manufacturer in a matter involving supply of a rancid chemical product;
- Acting for a chemical manufacturer and supplier and its insurer in response to a claim related to the alleged failure of a six hectare concrete warehouse floor (claim value of R 17 million); and
- Acting for a chemical manufacturer and supplier in response to a claim concerning alleged product deficiencies incorporated into catalyst products used in the automotive industry (claim value of R 18 million).