South Africa: The Consumer Protection Act: An Opportunity For Class Action Suits In South Africa?

Last Updated: 9 August 2011
Article by Eric Levenstein

The Consumer Protection Act (CPA), scheduled to become operational in April of this year, is likely to have far-reaching effects. The Department of Trade and Industry has stated that the CPA will, "introduce general principles of consumer protection and serve as an overarching governing statement on consumer protection matters in South Africa". In line with international trends, the CPA is aimed at increasing protection afforded to consumers, most notably with regard to products which are found to be defective, hazardous, or are likely to cause potential harm to consumers.

Section 61 of the CPA now introduces the concept of "strict liability" for suppliers. Essentially, this means that there will be no requirement for the consumer to prove fault / negligence on the part of the supplier or manufacturer; rather, all that the consumer is required to show is a causal link between the defective product and the resultant harm suffered by him or her.

This dramatically alleviates the burden of proof on the part of the consumer. He or she no longer has to obtain evidence and information about the manner in which the product was manufactured and which caused the harm / damage to the consumer.

To obtain this type of evidence prior to the commencement of legal action would make it extremely costly and difficult for the consumer. In the ordinary course of events, this information would only become available after pleadings have been exchanged and when the discovery process results in the exchange of documentation and information. Historically, prohibitive cost and the difficult burden of proof have resulted in a large number of potential claims being discarded from the outset. However, with the introduction of Section 61 and the shifting in the burden of proof, the consumer effectively can sit back and call upon the manufacturer to prove that the product which caused the harm was not defective.

It is envisaged that the strict liability provisions, will increase the likelihood that possible class action suits will be launched against manufacturers and suppliers of defective products in South Africa. These are actions which allow a large number of claimants to have their matter heard in the course of one proceeding.

The CPA specifically caters for the possibility of class actions. In Section 76(1)(c), the CPA states, "a court can award damages against a supplier for collective injury to all or a class of consumers generally, to be paid on any conditions that the court considers just and equitable to achieve the purpose of the Act".

This is the first time that such a provision will be incorporated into legislation in South Africa. It affords consumers in South Africa the opportunity to collectively, together with a multitude of claimants, proceed against a supplier who has introduced defective products into the South African market.

There is no doubt that classes of consumers who have cumulatively suffered damage, will be targeted by lawyers who are au fait with this section. These consumers will no doubt be persuaded to join forces and consider targeting a specific supplier or manufacturer which has allowed defective products to be sold in the market. Reduction and sharing of costs in class actions, coupled with lawyers being able to act on a contingency basis (as approved by the Law Society) might possibly result in a proliferation of litigation centred around substantial claims for damages.

At this stage, South Africa has only really seen class actions brought against the mining industry in respect of damage caused to miners as a result of the inhalation of asbestos and silicon dust. The asbestos case against Cape PLC was settled in 2001, and the silicosis litigation against Anglo American is still pending.

Damage caused by defective products, including motor vehicle recalls, defective pharmaceutical products and smoking diseases, could all find their way into court under the confines of the CPA, with the result that manufacturers and suppliers in South Africa may be faced with mounting legal expenses in defending these claims. Not only will they be potentially liable to pay out substantial damages to consumers who have suffered harm, but they will also have to bear the cost of the research and development needed to understand aspects of their products which might render them potentially dangerous.

Clearly product liability issues are potentially one of the biggest threats to a company's bottom line. The costs of payouts in respect of claims for product liability, as seen in the United States, can be crippling, and in addition to reputational damage, could force a business to close its doors.

In order to properly reduce the prejudice that could be caused by the new legislation, suppliers and manufacturers are strongly advised to ensure that they have adequate monitoring measures in place to quickly become aware of any defect in their products. Suppliers and manufacturers should also be ready to conduct proper and effective product recalls at the earliest opportunity in order to alleviate potential damage.

The longer a company delays before instituting a recall once it is aware of a fault in its product, the larger the exposure to further liability and eventual claims for damages. The CPA will police product recalls through the National Consumer Commission (NCC). The NCC will be empowered to regulate the process of product recalls in South Africa and may also, by written notice, force those suppliers who have not yet initiated a recall on faulty products to do so.

It is therefore crucial for suppliers to be aware of the forthcoming changes and their impact. There is a strong probability that litigation will increase and companies need to be prepared for this eventuality. To do otherwise, would result in suppliers and manufacturers being held liable in the strictest sense and being exposed to substantial levels of unnecessary litigation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions