Consumers will be able to consider and choose whether or not to sue the producer, importer, distributor or retailer of the relevant goods.
Currently the consumer has to prove negligence, or other fault on the part of (generally speaking) the retailer, before being able to be successful with a product liability claim.
In addition, the consumer has to prove a causal link between the defective goods and the harm suffered.
There are provisions of the CPA which allow for class actions and also allow for consumer protection groups to become involved.
Unlike in, for example, the United States of America (USA), South African common law has not recognised class actions. That changed when South Africa became a constitutional democracy. The Constitution provides for class actions where constitutional rights have been infringed. However, the Constitution does not provide for class actions against relating to product liability.
The CPA provides the South African courts with the authority to award proved damages against the supplier for collective injury to all, or a class of consumers generally.
The CPA provides that the courts must develop the South African common law, with a view to improving the realisation and enjoyment of consumer rights generally.
According to South African common law, contingency fees are unlawful. However, since the advent of the so-called "new South Africa" during the 1990s, there has been an increase in respect of contingency fees. That, together with the CPA, will, in all probability, result in a significant increase in product liability litigation, once the CPA comes into force and effect during October 2010.
The end result is that it is probable that product liability claims will increase significantly in South Africa from October 2010 onwards as a result of the following:
All of the above needs to be carefully and thoroughly considered by everyone involved in providing insurance coverage to producers, importers, distributors and retailers in South Africa, as the risks that they will be facing from October 2010 onwards, when the CPA comes into force and effect, will increase significantly.
• No-fault product liability in terms of the CPA;
• The consumer being legally entitled to claim against the producer, importer, distributor or retailer;
• The ability to institute class actions;
• The advent of consumer protection groups; and
• The increasing use of contingency fee arrangements.
No longer will the consumer be facing the significant hurdles that he has faced before in respect of product liability claims. Furthermore, unlike in the past, the consumer is likely to not only look at suing the entity that he purchased the goods from, but rather everyone involved in the "chain", commencing with the producer of the goods and ending with the supplier thereof.
Everyone involved in the insurance industry in South Africa, starting with the broker and ending with the underwriters, need to fully comprehend the abovementioned increased risks in South Africa in order to be able to, inter alia, ensure that adequate insurance coverage is provided to the insured and that the premium charged for such coverage is sufficient, taking into account the significantly increased risks.
