VAT LIABILITY FOR NON-EXECUTIVE DIRECTORS
May 24, 2017
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May 24, 2017
Section 61 of the Consumer Protection Act, 2008 (“CPA”) provides that producers, importers, distributors and/or retailers of goods (collectively the “Supplier(s)”) may be held liable for any harm caused as a result of the supply of unsafe goods, product failure, a defect or hazard in the product, inadequate instructions for the use of goods or warnings related to any possible hazard that might be associated with the product, whether or not there was “fault” on the part of the Supplier.
The position under section 61 is a modified form of liability on the part of Suppliers, in terms of which negligence and, consequently, foresee ability is no longer needed to be present in the Supplier’s conduct (in instances that are subject to section 61 of the CPA) in order to hold the Supplier liable under the CPA for damages arising from product liability.
The CPA also affords the consumer an opportunity to hold the producer, importer, distributor and retailer jointly and severally liable. This means that the consumer has the election to sue all aforesaid parties together or chose a party to proceed against. Suppliers of services who, for example, install or provide access to goods, are considered to be suppliers of such goods for purposes of the CPA irrespective of whether such person was the producer of the goods.
The CPA does, however, allow for some defences to this modified liability. Liability will not arise if:
- the defect or hazard results in harm that is wholly attributable to compliance with any public regulation;
- the defect or hazard did not exist at the time the product was supplied to another person in the supply chain;
- the defect or hazard was wholly attributable to compliance by a party in the supply chain of instructions given by another party in the supply chain, from whom the goods were received;
- it is unreasonable to expect a distributor or retailer to have discovered a defect or hazard; and
- if a claim is launched more than three years after the harm has occurred or the earliest time at which a consumer had knowledge of the material facts giving rise to the harm.
It will therefore be necessary for producers, importers, distributors and retailers of goods, to ensure that quality control measures (in respect of goods) are maintained and proper instructions for use, warnings of potential dangers or hazards are provided, in order to prevent a claim for damages by consumers.
It is also advisable for Suppliers (be it producers, importers, distributors and retailers of goods) to ensure that they secure appropriate product liability indemnities in their contacts with other Suppliers (i.e. Suppliers from whom they acquire goods for purposes of on-sale or supply to consumers), to limit their liability where they are not factually at fault for damages caused by such defective products.
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This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)