The Consumer Protection Act 68 of 2008 (the “CPA”) as amended, has, for many industries, altered the way in which business is conducted, specifically within the arena of the supply of goods to customers. For entities who are fortunate enough to trade with customers whose annual turnover will place them beyond the ambit of the CPA, this has become a safe haven where business is conducted as per usual and agreements are concluded without taking cognisance of the impact of the CPA. This safe haven, however, is based on a fiction and the CPA, in fact, has crossed the great divide of the threshold limiting its application.

1. The threshold for application of the CPA

The threshold of the CPA is determined as per Section 6.

In terms of section 6(1) of the CPA, the Minister of the Department of Trade and Industry (the “Minister”) must determine, by notice in the Gazette, a monetary threshold applicable to the size of the entity or juristic person for the purposes of the section 5(2) (b) of the CPA.

Section 5(2)(b) of the CPA, states that the CPA does not apply to any transaction in terms of which the consumer is a juristic person whose asset value or annual turnover, at the time of the transaction equals or exceeds the threshold value determined by the Minister in terms of section 6.

The Minister determined that the monetary threshold applicable to the size of the juristic person in terms of section 5 (2) (b) is R 2 Million by way of publication in the Government Gazette.

2. The provisions of Section 5 of the CPA

Section 5(2)(b) of the CPA determines that a juristic person whose asset value or annual turnover equals or exceed the threshold value as determined in Section 6 of the CPA, as discussed in paragraph 1 above, does not fall within the ambit of the CPA.

This effectively creates the impression that companies, whose customers are mostly juristic persons who have an annual turnover of more than R 2 Million a year, can ignore the provisions of the CPA.

A reading of Section 5 (5) of the CPA, however, changes this presumption drastically.

Section 5 (5) of the CPA states the following: “If any goods are supplied within the Republic to any person in terms of a transaction that is exempt from the application of this Act, those goods, and the importer or producer, distributor and retailer of those goods, respectively, are nevertheless subject to Sections 60 and 61”.

3. Section 60 and 61 of the CPA

Sections 60 and 61 of the CPA deals primarily with the safety and monitoring recall of products and the liability for damage caused by goods respectively.

In terms of Section 61 of the CPA a producer or importer, distributor or retailer of any goods is liable for any harm caused wholly or partly as a consequence of supplying unsafe goods, a product failure, defect or hazard in any goods, or inadequate instructions or warnings in respect of the use of the goods, irrespective of whether the harm resulted from any negligence on the part of the producer, importer, distributor, and retailer as the case may be.

Therefore, Section 61 makes provision for modified so called “strict liability” of an importer, producer, distributor or retailer of the goods. In terms hereof an importer, producer, distributor, and retailer will be jointly and severally liable for the defective goods. Therefore, the customer does not have to prove fault in the form of negligence against a specific role player in the chain of distribution. The customer merely has to prove that the goods are in fact defective and that loss or damage resulted as a consequence thereof.

An importer, producer, distributor or retailer may, however, as a defence, state that the defect or hazard that made the goods unsafe was not present at the time that it supplied the goods or, in the case of a distributor or retailer of goods, who is not engaged in the manufacturing or importing of goods, that it is not reasonable to have expected them to have discovered a defect in respect of the goods, when considering the role they played.

Harm for which the importer or producer, distributor or retailer may be held liable for is the death of, or injury to, a natural person, an illness of a natural person, any loss of, or physical damage to, any property, irrespective of whether it is movable or immovable and/or economic loss that results from the aforegoing.

4. Effect of the CPA crossing the great divide

The effect of Section 5 (5) combined with Section 61 of the CPA is that all importers or producers, distributors or retailers must take cognisance of the liability that attaches to them by virtue of Section 61. Limitation of liability clauses in terms and conditions and service level agreements must be reviewed and potentially amended in order to comply with the CPA and quality control measures must be implemented in order minimise the risk of the role players in the supply chain from possible claims in terms of Section 61 of the CPA.

The CPA has undoubtedly increased the level of care, skill and responsibility to be had in the field of the supply of goods and due regard is to be had by importers, producers, distributors and retailers to the provisions of the CPA detailing liability in the supply sector, even when the threshold of the CPA would otherwise exclude the other provisions of the CPA.

Phillip Kruger

Legal Advisor, Johannesburg