Legal
Issue No. 6 - July/September 2002
Self Defence in Business
by Michael Hegarty
With insurance costs soaring recently and some businesses even being denied insurance altogether, some people have decided that the answer to all their problems is simple and straightforward. Whenever you enter into a contract, put in a clause to say that if something goes wrong, you are not liable.
It is quite common for parties to a contract to incorporate exclusionary terms under such guises as Exception, Exemption, Disclaimer, No Warranty Given, No Responsibility for Loss or Damage, or At Owner’s Risk. Exclusionary clauses have a certain degree of attractiveness, but they do not always work. They can only go so far towards protecting a party, and cannot be relied on to be ‘watertight’.
First, there is the question of whether or not the clause actually forms part of the contract. If a party has signed a contract containing the exclusion clauses, the answer is clearly ‘yes’, even if the clause is in ‘fine print’, but what if the contract is not of a type that requires signature? In those cases, the answer depends on whether or not the customer was given reasonable notice of the contractual terms. For example, when entering a car park, the conditions of entry are printed on the ticket, or posted on a wall near the entrance. If the circumstances show that the terms were brought to the customer’s attention prior to the formation of the contract, the terms will form part of the contract. If the notice is easily legible by a driver about to enter the park, the requirement of reasonable notice will be met. However, a notice saying ‘Terms available on request’ or ‘Terms available inside office’ may not be effective, as the customer is being expected to seek out the terms, rather than having the terms brought to his or her attention. Where an exclusion clause is unusual or harsh the requirement of ‘reasonable notice’ is stricter that usual.
If the exclusionary clause ...
