It has been more than 5 years since the promulgation of the Consumer Protection Act. In the third part of this article, Janusz Luterek gives us the lowdown on liability. And it’s a low blow any which way you look at it…
Linda: What kind of liability does the Act place on the suppliers of food? What about the health and safety of the consumer? How does the Act make provision for this?
Janusz: The Act provides, amongst others, for a warranty of quality, the right to safe, good quality goods, warnings concerning the fact and nature of risks associated with goods, safety monitoring and recall of products, and liability for damage caused by goods. Of these, it seems likely that the liability for damage caused by goods will have the most far reaching effects on your business, however, in time the other consumer rights in this chapter will increase the burden on your business.
Thus, in the context of food products, the consumer is entitled to food products which have the product characteristic as indicated on the packaging and in marketing, which will have a reasonable shelf life depending on the type of product, for example, fresh, pasteurised, UHT, and the like. The products should be safe and not contain any foreign objects nor be produced using any undesirable additives nor packed in material which would detract from the safety or suitability thereof. The products should always comply with all Agricultural Products Standards, Food labelling requirements, and compulsory specifications.
Linda: What does “no fault” liability mean in the context of the Act and what should food producers do about this?
Janusz: Suppliers need to take note that the liability for harm or injury caused by goods introduced under the Act is vastly different from the position prior to the coming into effect of Act. Under the CPA the supplier need not have been negligent nor breached an explicit or implied contractual term in order to be liable.
Thus the Act imposes a no fault liability on any producer or importer, distributor or retailer of any goods for damage caused wholly or partly as a consequence of supplying any unsafe goods, a product failure, defect or hazard in any goods, or inadequate instructions or warnings provided to the consumer pertaining to any hazard arising from or associated with the use of any goods, irrespective whether the harm resulted from any negligence on the part of the producer, importer, distributor or retailer, as the case may be.
Thus, theThe extent of provable damages has not been changed by the Act, however, the consumer will no longer have to prove negligence on the part of anyone in the supply chain in order to open the door to a damages claim, which is the case under the present common law.
Linda: This sounds like the food manufacturer has no rights in a claim. Surely this is not the case?
Janusz: The only defences open to a person in the supply chain alleged to be liable for harm caused to a consumer will be that:
(a) the unsafe product characteristic, failure, defect or hazard that results in harm is wholly attributable to compliance with any public regulation;
(b) the alleged unsafe product characteristic, failure, defect or hazard—
(i) did not exist in the goods at the time it was supplied by that person to another person alleged to be liable; or
(ii) was wholly attributable to compliance by that person with instructions provided by the person who supplied the goods to that person, in which case, subparagraph (i) does not apply;
Linda: So, it will be up to the supplier to prove these things. Records of composition, recipes, additives used and storage and transportation temperatures will be essential. Records of deliveries to show that goods were acceptable will also be critical. This means our food safety and quality systems need to be operating on a daily basis.
Janusz: A further element of liability which is introduced by the Act is that of “no fault vicarious liability” in terms of which if an employee or agent of a person is liable in terms of this Act for anything done or omitted in the course of that person's employment or activities on behalf of their principal, the employer or principal is jointly and severally liable with that person. Training of employees is thus essential.
Linda: What advice would you give suppliers regarding these liability issues?
Janusz: A major consequence of the Act, and especially the no fault liability, will be the need for distributors and retailers to have insurance tailored for this type of liability and systems, both administrative and laboratory, to test products and keep accurate records in order to be able to sustain the defence that it is unreasonable to expect the distributor or retailer to have discovered the unsafe product characteristic, failure, defect or hazard, having regard to that person's role in marketing the goods to consumers. Obviously the suppliers will need to provide the same information to defend themselves.
Linda: What about product recalls? Is a recall procedure necessary?
Janusz: The Act puts in place a product recall regime in terms of which product recalls may be ordered by the National Consumer Commission and which may require accurate record keeping of the sales of designated products and returns thereof for product failure monitoring and for reporting of such figures in order to permit recalls of out of specification products to be ordered before they cause damage or harm.
About the Author
Janusz F. Luterek, Pr.Eng for Hahn & Hahn Attorneys
For advice on compliance and other legal issues in the food industry contact Janusz Luterek at firstname.lastname@example.org - your food lawyer.
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