BY PARIKSHA MOODLEY, CAMARGUE UNDERWRITING MANAGER.
Disclaimers are everywhere – anytime someone is warning you of something or letting you know something for your own good, it’s a disclaimer.
Remember when one woman sued McDonald’s for spilling hot coffee on herself and won $2 million? After that the Company upped the disclaimer on their cup – this coffee is SUPER HOT – be careful. This example left me pondering – are my colleagues familiar with the law in relation to disclaimers and what have I done to make our clients and brokers aware of it? The outcome has been this short article.
As a starting point a clause that excludes the liability on the part of a person or company, whether it be a hospital, hotel, restaurant, shopping mall, a tourist attraction or even a petrol-service station can be incorporated into an agreement between two parties, either as an agreed term in a contract, or in a notice displayed on the premises. When it is contained in the written agreement, it is referred to as an exemption or exclusion clause, and when it is displayed, it is referred to as a disclaimer notice.
On either basis, the party inserting the clause or displaying the notice may avoid liability for his or her actions. Whether such a clause will be upheld will depend always on the circumstances of each particular case.
It is worth mentioning that contracts, terms or notices excluding the liability of a party, as a general rule, are valid. Previously, a consumer could be held to a disclaimer notice where the consumer was aware of the notice or if the supplier took reasonable steps to bring the notice to the attention of the customer.
The Consumer Protection Act of 2008 (“the CPA”) has brought in stringent requirements which control the use of exemption provisions in consumer agreements. The introduction of the CPA has led to any such signs or provisions being interpreted strictly and most likely in favour of the consumer.
The CPA has placed a significant burden on the supplier to ensure that the nature and effect of the provision/notice is drawn to the attention of the consumer in conspicuous manner and form that is likely to draw the attention of an ordinarily alert consumer, considering the specific circumstances. This must be done before a consumer enters into a transaction, starts to engage in an activity, enters or gains access to the facility. There is an even greater burden where such a risk is an unusual risk or one that cannot be reasonably foreseen.
Where a disclaimer is erected, the type of premises, specific layout and other physical characteristics will play a role in determining whether the disclaimer was displayed in a conspicuous manner. Generally, such notices must be visible, large enough to be seen and read. These notices must appear at various locations in sufficient numbers on the premises of the establishment where the risk might occur.
Even after the supplier has gone through the effort to ensure that the disclaimer has been drawn to the attention of the consumer the exemption provision still subjected to a fairness test.
Whether the exemption term or notice is seemingly reasonable and fair will depend on each circumstance. However, when one is dealing with the exclusion of liability for death or personal injury, the exemption provision is presumed unfair and the supplier has the burden to prove that the exemption provision or notice is fair.
Exemption clauses and disclaimers are all beneficial to insurers (especially in relation to public liability policies) as they often have the effect of limiting the insurers’ exposure and should not be overlooked when one is dealing with any particular claim. However, the insurer or supplier should never rely solely on a disclaimer as the defence to any claim. The insurer should always ascertain if the disclaimer meets the requirements of the CPA and investigate the circumstances of each claim before placing reliance on the exemption clause or disclaimer.