LEGAL RISK ANALYSIS

Supplier Liability & Legal Risk

Understanding institutional liability exposure in financed vehicle transactions

Overview of Supplier Liability Risk

South Africa's Consumer Protection Act (CPA) imposes strict liability on suppliers of defective goods. In financed vehicle transactions, the question of who qualifies as the supplier creates complex liability scenarios for financial institutions.

When a bank extends credit for a vehicle purchase, the bank's legal relationship to the transaction determines potential liability if defects, fraud, or misrepresentation emerge post-delivery.

DECEMBER 2025 SUPREME COURT OF APPEAL RULING

What Changed in December 2025

The Supreme Court of Appeal clarified that when financial institutions extend pre-approved credit without independent technical verification, they may bear liability exposure if the vehicle contains latent defects or if the dealer misrepresented the vehicle's condition.

The court held that institutional due diligence in pre-approved finance scenarios requires more than reliance on dealer representations. Independent technical assessment is a reasonable risk mitigation measure.

Before December 2025

  • •Banks relied on dealer warranties
  • •No independent verification required
  • •Liability primarily with dealer/supplier

After December 2025

  • •Independent verification expected
  • •Financiers share liability risk
  • •Due diligence burden on institutions

How Financiers Are Exposed

Scenario 1: Latent Defects

Customer finances a vehicle. Three months later, major engine failure occurs. Forensic analysis reveals the defect existed at the time of sale. Customer claims the bank should have verified the vehicle before approving finance.

RISK: CPA s55 liability for defective goods

Scenario 2: Odometer Fraud

Dealer rolls back odometer. Bank approves finance based on stated mileage. Electronic forensics later proves fraud. Customer seeks recourse from both dealer and financier.

RISK: NCA s90 unlawful credit agreement

Scenario 3: Undisclosed Accident Damage

Vehicle sold as "accident-free." Electronic Archaeology™ reveals airbag deployment history. Customer argues bank failed to conduct due diligence before approving credit.

RISK: Institutional reputational damage & litigation

How Forensic Audits Mitigate Risk

Independent forensic vehicle audits create documentary evidence of institutional due diligence

Due Diligence Proof

Demonstrates institutional care in verifying vehicle condition before credit approval

Evidentiary Defense

Court-admissible documentation to defend against liability claims

Risk Transparency

Early identification of defects enables informed risk decisions before approval

Legal Alignment Without Legal Advice

Auto Forensics SA does not provide legal advice. All findings are technical assessments only. Legal interpretation of forensic evidence must be conducted by qualified legal counsel.

We provide objective technical data. Legal counsel determines how that data applies to specific liability scenarios, regulatory compliance, and litigation strategy.

For legal advice on supplier liability, CPA compliance, or NCA obligations, consult a practicing attorney specializing in financial services law.