Jul 7,2010 / News / Legal Brief

South Africa’s new Consumer Protection Act has worldwide implications. Every foreign company that sells goods and services destined for South African consumer markets will have to comply with this new legislation and, if in breach of its product liability or labelling provisions, could be sued for damages.

“It is critical for local retailers to understand the implications of importing products and for foreign companies to be aware of their obligations,” says Eric Levenstein, director and product liability specialist at corporate and commercial law firm Werksmans Attorneys. “The Consumer Protection Act is not just binding on companies operating on South African soil, but also on foreign manufacturers and distributors whose products reach South African consumers.”

Levenstein says that when the Act becomes fully effective later this year, it will apply to suppliers regardless of whether their head offices are within or outside South African borders. “If a defective or incorrectly labelled product were to cause harm or injury to a South African consumer, the foreign manufacturer could become a co-defendant together with the local retailer or supplier in product liability litigation.”

The threat of such litigation cannot be taken lightly for two reasons. “One is that the Consumer Protection Act places the burden of proof squarely on the shoulders of the supplier and not, as in the past, on the consumer,” Levenstein says. “Strict liability, as this is known, means that the onus is on the supplier to prove that the product was not defective. The consumer only has to show harm or loss and that this was caused by the product concerned.”

The implication of strict liability for suppliers – local and foreign – is that it gives consumers greater legal clout when lodging product liability damages claims.

“This links up with the other major issue that foreign suppliers need to be aware of – the fact that their assets in South Africa could be forfeited to pay a damages order,” Levenstein says. “The fact that their goods in South Africa could be judicially attached for jurisdictional purposes means that the product liability provisions of the Consumer Protection Act are far from toothless for foreign suppliers.”

Just as important to note are the Act’s product labelling and information requirements. If a South African consumer suffers loss or injury because a foreign-made product was wrongly or inadequately labelled, both the local retailer and the foreign supplier could be held liable.

“Suppliers will have to be particularly careful about proper labelling of products that need warnings or special instructions for usage,” he says. “Where any product has a risk of an unusual nature that an ordinarily alert consumer could not be expected to know about, the supplier is compelled to bring this to the consumer’s attention in plain and understandable language.”

Levenstein advises local retailers and distributors to check the labelling of foreign-made goods carefully before putting the products into circulation. “Never just onsell the products; always check the labelling first.”

He adds that while many overseas manufacturers operate from countries with strong consumer right cultures, South African retailers should not take this for granted. “Even when dealing with trading partners steeped in a tradition of consumer protection, South African companies need to satisfy themselves that the products they and their suppliers are bringing in to the country comply with the new legislation.”