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Prior to the commencement of the Consumer Protection Act 68 of 2008 manufacturers and/or supplier of goods could, in terms of a contractual warranty, exclude their liability for risk of loss or damages to property (and any other loss) resulting directly from defective or unsafe goods and services supplied by them. These warranties only covered the potential claim for the replacement of faulty goods and not for associated damages or loss incurred as a direct result thereof. This limited “product replacement only” warranty will no longer be of any force or effect in terms of the Consumer Protection Act (in in after referred to as “the Act or CPA”).

The aim of the Consumer Protection Act is to ensure that all goods provided are safe to use, are reasonably suited for the purpose for which they are generally intended and are of good quality, good working order and free of any defects (Section 55 of the CPA). The Act further provides for the right to demand quality service which includes the use, delivery or installation of goods that are free of defects and of a quality that a person is entitled to expect. (Section 54 of the CPA).

Liability for harm and damage which arises as a direct result of the defective or unsafe goods is now governed by Section 60 and 61 of the Act. These sections are important to all suppliers and/or manufacturers, as that they apply broadly to the supply of all goods and services, and are not limited to transactions to which the CPA applies. Therefore Section 60 and 61 apply to transactions which fall within the ambit of the act but also apply to transactions which would normally be exempt from the application of the Act (for example between a contractor and subcontractor). This means that Section 60 and 61 of the CPA must be taken into consideration when drafting a warranty clause for the supply of goods even when the goods are being supplied by a subcontractor to a main contractor.

The CPA provides for the safety monitoring and recall of any goods which may be unsafe, defective or hazardous (Section 60 of the CPA).  These goods may cause potential harm to the public. The National Consumer Commission has been set up to promote effective investigation and programmes to monitor potentially unsafe goods.

The CPA provides for the liability for damage caused by unsafe or defective goods (Section 61 of the CPA) which relates directly to the warranty.  This section says that a supplier and/or manufacturer of any goods is liable for any harm caused, as a consequence of supplying goods which are; unsafe goods, goods with a product failure defect, hazard or situations where inadequate instructions or warnings have been provided to a person with regards to potential hazards arising from the use if the goods. This liability extends to the supplier and/or manufacturer irrespective whether the harm or damage resulted from any negligence on the part of any of the supplier and/or manufacturer.

The parties which can be held liable include a producer, importer, distributor or retailer of any goods. This also includes associated services of the production and installation of the goods which includes those parties who applies, supplies, installs or provides access to any goods. If more than one of the abovementioned parties are liable, then the parties are held to be jointly (and severally) liable for the loss occasioned by the damage or harm caused by the goods.

In the event that the goods provided are unsafe, have a product failure, defect or hazard or that inadequate instructions or warnings have been provided as to the use of the goods, the supplier and/or manufacturer will be liable for the costs of the replacement of the above-mentioned goods as well as any loss or damage to property and other or economic loss which was directly caused by the defective or unsafe goods. These costs can include for example the costs associated to the of removal of the defective goods, and the installation of the new goods. Damages which cannot be directly attributed to the defective or unsafe goods will most likely be limited.

The section of the CPA regulating liability for damages caused by goods cannot simply be waived in an agreement. Any clause in any agreement which waives liability will be inconstant with the law and will not protect the supplier and/or manufacturer from claims arising from direct damage caused by unsafe or defective goods supplied (section 51 of the CPA). It is therefore recommended that all warranty clauses be carefully considered and amended to be brought inline with the provisions of Section 60 and 61 of the Consumer Protection Act.