The CPA and SUPPLIER Rights & Recourse

STATUS OF INDEMNITIES AND DISCLAIMERS

– PART 1 –

As matters stood before the CPA came into effect April 01 2011, you could indemnify yourself or disclaim liability completely, including for your own acts, omissions and negligence. So much so that you could in fact exclude liability for your gross negligence.

The CPA now specifically states that you may not exclude or limit your liability for/to gross negligence, whether you do so by means of an indemnity or disclaimer – Section 51.1 (c) prohibits any such term or condition if it has the effect to:
‘limit or exempt a supplier of goods or services from liability for any loss directly or indirectly attributable to the gross negligence of the supplier or any person acting for or controlled by the supplier’

Regulation 45 (Issued in terms of Section 120) deals with terms and conditions that are not fair and reasonable and regulation 45.3 determines that the following clauses will be deemed to be unfair:

• excluding or limiting the liability of the supplier for death or personal injury caused to the consumer through an act or omission of that supplier subject to section 61 (1) of the Act;
• limiting, or having the effect of limiting, the supplier’s vicarious liability for its agents;
• forcing the consumer to indemnify the supplier against liability incurred by it to third parties.

What does section 61 (1) state and what does ‘deemed to be unfair’ mean and what are the implications?

• Section 61 (1) pertains to absolute (no fault or strict) liability arising from unsafe goods, product failure, hazard or defect (Defined in section 53) and inadequate warnings or instructions (You should bear in mind the wide definition of ‘goods’)
• If the body adjudicating the dispute or complaint upholds the unfairness i.e. agrees with the ‘deeming’ thereof, it can make a number of findings in terms of section 52.3, i.e. it can:
• Rule the clause/term/condition invalid/void/unenforceable;
• Make this same ruling with regard to the entire agreement;
• Order the offending party to reimburse the consumer any costs and expenses incurred in pursuing the complaint and the agreement per se;
• ‘any further order that is just and reasonable in the circumstances.’

I am sure you’ll agree with me the above can have a major impact on your business!