Product liability and the strange case of a snail in a ginger beer bottle

In England and the US, there is a legal principle called “tort” that derives from the French for ‘wrong’. This is known as “delict’ in South African Law, which describes the circumstances in which one person can claim compensation from another for harm that has been suffered.

Actions under the Consumer Protection Act 68 of 2008 (the “CPA“)

In a 1932 case that changed the law of product liability in England, the House of Lords in Donoghue v Stevenson [1932] AC 562 heard that Mrs Donoghue drank a bottle of ginger beer in a café. A dead snail was in the bottle. She fell ill, and she sued the ginger beer manufacturer, Mr Stevenson. The court held that the manufacturer owed a duty of care to her, which was breached, because it was reasonably foreseeable that failure to ensure the product's safety would lead to harm to consumers and awarded her damages.

In South Africa, product liability is regulated by the CPA.

Section 5 of the CPA provides that the CPA shall apply to every transaction, agreement, advertisement, production, distribution, promotion, sale or supply of goods or services.

Section 61 of the CPA renders producers or importers, distributors or retailers of any goods, liable for harm caused by the supply of unsafe goods, product failure, defective or hazardous goods as well as where such harm is as the result of inadequate instructions or warnings being given to the consumer. This liability arises irrespective of whether the producer, importer, distributor or retailer acted negligently. Subject to certain exceptions set out in the Act, liability is therefore strict. One such exception to this general principal is if, at the time the goods were supplied to another person alleged to be liable or at the time the goods were supplied to the consumer, the goods were safe and fully functional and free from the alleged defect or hazard.

Unless a consumer has been expressly informed and expressly accepted goods that are not of a good quality, the consumer has the right to receive goods that are reasonably suitable for the purposes for which they are generally intended, good quality, good working order, free of defects or hazards, useable and durable for a reasonable period having regard to the normal use and the surrounding circumstances of their supply. Thus, producers, importers, distributors or retailers are prohibited from producing and distributing unsafe goods. The CPA imposes strict liability on producers, importers, distributors or retailers for supplying unsafe goods. Strict liability is also imposed in respect of product failure, defective and hazardous goods.

So, if you get sick because you drink a cooldrink that contains a snail, you can claim damages from any or all the producers, importers, distributors or retailers of the beverage.

Product liability that falls outside the CPA

Transactions concluded for the supply of goods or services to a consumer who is a juristic person are excluded from the ambit and application of the CPA where such a consumer has an asset value or annual turnover exceeding R2 000 000 (Two Million Rands).

When is a supplier liable for loss caused to the user by a defect in the product? The court said in Ciba-Geigy (Pty) Ltd v Lushof Farms (Pty) Ltd:

‘[A] manufacturer who distributes a product commercially, which, in the course of its intended use, and as the result of a defect, causes damage to the consumer thereof, acts wrongfully and thus unlawfully . . .’.

There must be a contractual nexus between the parties. Their contract should lay down the ambit of their reciprocal rights and obligations. This would define, expressly or tacitly, the nature and quality of the performance required from each party. While the contract persists, each party has adequate and satisfactory remedies if the other commits a breach.

Damages for product defects that fall outside the ambit of the CPA would not extend to a third party ‘not in contractual privity’. This is illustrated in the case of AB Ventures v Siemens where AB Ventures concluded a written agreement with Lumwana Mining Company Limited under which AB Ventures undertook to construct to completion the Lumwana Copper Mine in northern Zambia. Several parties were involved in the supply chain. Siemens had to supply four specialized electrical units, that turned out to be defective. AB Ventures unsuceesfully sued Siemes for damages, the court concluding that there was no legal nexus  between AB Ventures and Siemens.  

Basically, in damages claims for product liability the first principle of the law of delict is that loss ordinarily lies where it falls.