The new Consumer Protection Act is particularly far reaching, extending to almost all areas of the supply of goods and services in South Africa, says law firm Eversheds partner Simone Monty.

The Act states that suppliers must accordingly try to familiarise themselves with the provisions of the Act, so they are aware of the extent of their potential liability, as well as the nature and extent of compliance required by the particular supplier, she says.

At first glance, based both on “the purpose and policy of the Act”, it would seem that the Act really seeks to provide protection to individual consumers and small to medium-sized enterprises who are vulnerable and require the Act’s protection.

But, on close reading of section 5, one finds that, in terms of section 5(5), “if any goods are supplied within the Republic to any person in terms of a trans-action that is exempt from the application of this Act, those goods and the importer or producer, distributor and retailer of those goods are nevertheless subject to sections 60 and 61”.

The liability provisions of section 60 and 61 of the Act will apply, notwithstanding the exemption. As such, these large juristic entities will receive the protection granted pursuant to those sections, she adds.

Monty notes section 61 provides for liability of each person within the supply chain without requiring a consumer to prove fault on the part of such a person, thus introducing the concept of strict liability.

“Further, this liability is stated in section 61 as being joint and several, and the consumer is empowered to join each person in the supply chain to the relevant action for damages. In these circumstances, all that is required to be proven by the consumer is that goods were supplied to it in consequence of which it suffered damage,” Monty explains.

Unless a supplier is able to formulate a defence based on one of the grounds referred to in section 61, the supplier may be held strictly liable to a consumer in terms of this section, together with some or all the other persons in the supply chain.

Where a consumer suffers damages as a result of the supply of, for example, a defective product and institutes an action for damages against one party in the supply chain, that party would typically join one or more of the other parties in the supply chain to the action in order to seek an apportionment of liability or to prove a defence based on the liability of that party.

The question that arises is whether persons in the supply chain can, apart from invoking the provisions of section 61 to prove an apportionment of damages or defence as against other members of the supply chain, invoke the provisions of section 61 as consumers themselves.

This would mean that a large player in the supply chain, such as a retailer, would be able, in its capacity as a consumer in relation to the balance of the supply chain, to hold the distributor, importer and manufacturer of those goods liable for damages without proving fault. This would mean that, in circumstances where, for example, a large shipment of goods bought by the retailer from a distributor is defective and the retailer accordingly suffers substantial damages as a result, the exposure of the persons further up the supply chain is enormous, she adds.

As mentioned, the provisions of section 5(5) of the Act indicate that section 61 applies notwithstanding that the “transaction” is exempt from the Act’s application. A “transaction”, in turn, includes the supply of goods to a distributor or retailer.

Prior to the introduction of the Act, a consumer was required to prove fault in the manufacturer’s production process, which was often complex and highly tech- nical, making it extremely diffi-cult for the consumer to prove the necessary fault.

Further, it would seem that a supplier’s exposure in respect of strict liability is not limited to liability to end consumers, be they individuals or small or large juristic entities, but includes potential liability to other members of the supply chain.

In addition to the vetting process required in respect of documentation, processes and agreements, suppliers will need to ensure that they take out liability insurance adequate to cover all potential risks.