Seller Beware: Rules changed for suppliers

In Commercial Law

The legal landscape for anyone involved in the supply chain of consumer products was fundamentally altered on June 20, 2011.

That was the day the Canada Consumer Product Safety Act came into force. This is a piece of legislation that impacts all of us on a daily basis, whether we know it or not. After all, who among us is not a consumer of consumer products?

We are all familiar with consumer product recalls. Whether it’s imported children’s toys with toxic paint or automobiles with faulty air bags, recalls have become regular stories on the evening news. Prior to this past June however, the Canadian federal government had only limited powers to recall a very limited number of consumer products.

The CCPSA changes all of this and gives Health Canada broad enforcement powers, including powers of recall, over manufacturers, importers, advertisers, labellers, testers or transporters of consumer products. Enforcement and Patricia Blair compliance will be the prerogative of the newly created Consumer Product Safety Directorate (“CPSD”) and its Product Safety Officers.

While all Canadian manufacturers and importers of consumer products should familiarize themselves with the CCPSA in its entirety, this article will focus on two crucial provisions that create significant obligations for everyone involved in the consumer product supply chain.

Section 13 of the CCPSA creates a stringent “document keeping” regime. Anyone who manufactures, imports, advertises, sells or tests a consumer product has an obligation to prepare and maintain records about the who, what, where and when of all the consumer products that flow through their hands.

The above parties should always be able to answer the following questions: Who made it? Who imported it? What is it? Where is it going? When was it sold? Who was it sold to? These records must be kept for six years and they must be available to Health Canada upon request. Failure to do so could trigger some of CCPSA’s offence provisions (see sections 41-48) which carry significant penalties.

Section 14 requires distributors, manufacturers, importers and sellers of consumer products now have a serious duty to report any incident relating to those products to Health Canada.

The definition of “incident” as written in the CCPSA is incredibly broad and requires any occurrence anywhere in the world involving a consumer product that:

  • Resulted in death, serious injury or adverse effects on health; or
  • Had defects; or
  • Had insufficient or incorrect labeling; or
  • Was subject to recall or health or safety measures to be reported to Health Canada.

This definition as written creates an onerous duty indeed since it doesn’t require the product involved to be either hazardous or defective in order to trigger the reporting requirement. The federal government has recognized this and has now published a Guide for section 14.

The Guide narrows the range of what is reportable to incidents where:

  • There is any indication that the consumer product contains an unreasonable hazard; and
  • This hazard creates a reasonably foreseeable risk of harm from not only the foreseeable use but also the foreseeable misuse of the product. (As “unreasonable hazard” and “foreseeable use” are not defined terms in the CCPSA we will have to wait to see how they are interpreted by the CPSD. In the meantime, erring on the side of caution is likely the best course of action!)

The CCPSA creates a new legal environment for everyone involved in the consumer product supply chain. Everyone on the supply side should ensure that they have protocols in place to ensure compliance with sections 13 and 14.

It may be time to adopt a new maxim

First Publish: March 2012, Business Examiner Vancouver Island pg 43