Companies regularly seek legal advice in relation to tax compliance, licensing requirements, and local content and participation requirements governing their respective industries.
However, for manufacturing companies, the risk of liability in the event of defective goods is often not taken into consideration or treated as a priority - until a claim arises.
It's often too late by that point, and therefore it is crucial to consider the following question long before the storm hits: “what are the liabilities of a manufacturer of defective goods under the relevant laws in Ghana?”
In essence, liability may arise either by statute, contract or under the common law tort of manufacturer's liability. The damages to be paid when the manufacturer is found liable under a contract or tort may be substantial and, where the liability arises under a statute, the manufacturer may be liable on a summary conviction to be fined, imprisoned, or both, depending on the type of goods and the statute which governs the industry within which the manufacturer operates.
For example, under the Maritime Pollution Act 2016, where the owner or master of the ship is able to establish that an offence under the Act was committed as a result of defective goods manufactured by a third party, that third party – and not the owner of the ship - will be held liable. As such, the manufacturer may pay a fine between USD600 and USD12000 and/or be imprisoned for not more than four years.
Similarly, under the Public Health Act 2012 , a manufacturer of food may be liable on a summary conviction to a fine between USD1200 and USD9000 or to a term of imprisonment between four and 15 years, or both, if the food (including a food product) is defective, unwholesome or unfit for human or animal consumption.
In addition, a manufacturer of goods may be liable to pay damages (both general and special) under the common law tort of manufacturer's liability where the consumer is able to prove that he has suffered damage as a result of the defects in the goods supplied by the manufacturer. General damages flow naturally from the breach of duty of care, while special damages are awarded if the consumer is able to prove that he has incurred some loss, including loss of business reputation or operating revenues.
A manufacturer is therefore obliged to use reasonable care in the preparation of a product in order to avoid any harm to the consumer, including harm to property and financial loss.
A may contain terms on liability of the manufacturer for goods being defective. In such an instance, the manufacturer will suffer damages, which may be liquidated or unliquidated.
It is important to note that contracts are always overridden by statutes. In other words, where a statute expressly provides for the liability of the manufacturer upon the sale of defective goods, the statute will still apply, even if liability is excluded under the contract.
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.