Posted by Esha Kumar on 3 October 2019
Many recreational service providers, including gyms and rock climbing centres, offer their customers opportunities to participate in activities that have the potential to cause injury or even death.
If you provide recreational services, you’ll need to ensure your terms and conditions cover you for these risks.
Otherwise, you’ll increase your chance of getting sued and being liable for large sums of money.
Clauses in your business’ terms and conditions can exclude your liability for death and injury.
However, doing this correctly is difficult because the laws in this area are very complex.
Before you add any exclusion clauses into your business terms and conditions, it’s important to know what they are and how they can protect you.
What Is An Exclusion Clause?
An exclusion clause has the potential to fully exclude your liability if something goes wrong while a customer is using your service.
Exclusion clauses can be found in a lot of simple customer contracts. They’re particularly common in the terms and conditions of businesses that provide recreational services.
However, inserting an exclusion clause into your business’ terms and conditions isn’t always simple due to the range of laws and regulations that vary from state to state.
What makes this complex in Australia is the interaction between the law of negligence and the Australian Consumer Law and the existence of different defences in each of the state and territory Civil Liability Acts (CLAs).
Here are three key areas to consider if you’re thinking of adding an exclusion clause to your business’ terms and conditions.
Negligence can often be a difficult area of law to navigate.
As a recreational service provider, you owe a duty to your clients that your services will be of a particular standard and that you will not be negligent.
You may exclude liability for negligence if you draft your contract correctly. However, if your negligence also means a breach of a consumer guarantee under the Australian Consumer Law (ACL), there are very specific provisions on how that may be done.
Generally speaking, if you are able to correctly exclude the consumer guarantees under the ACL, you will also exclude your liability for negligence.
Australian Consumer Law
The ACL protects consumers when they purchase goods or services by providing automatic rights, such as the ‘consumer guarantees’.
Generally, under the ACL, it’s your business’ responsibility to guarantee that activities will be provided with due care and skill.
If a person using your services is injured as a result of your negligence, they may be able to sue your company for not complying with the ACL’s consumer guarantees.
In most scenarios consumer guarantees cannot be contracted out of. However, recreational service providers may exclude their liability under the ACL so long as the liability relates to injury or death.
There are some limitations to this. For example, you cannot exclude your liability where you have been reckless or if it relates to associated services (such as paid lockers in a gym).
Another important consideration is that In some states, you’ll need to include specific wording in your business contracts to effectively exclude your liability for death and injury under the ACL.
The Civil Liability Act
Each State and Territory has a different Civil Liability Act (CLA).
These Acts set out the civil liability regime in each State or Territory and may have a significant impact on your recreational service provider business.
In some states, you may be able to exclude your liability under the CLA through a risk warning.
This is difficult to do for a variety of reasons. For example, under the Western Australian legislation ‘a risk warning to a person in relation to a recreational activity is a warning that is given in a manner that is reasonably likely to result in people being warned of the risk before engaging in the recreational activity’.
Such legislatie guidance is quite confusing and unhelpful. A careful analysis of the type of risk that you’re trying to warn a consumer about, as well as existing case law, is required to draft a risk warning that will be able to protect you.
Having a lawyer guide you through this process will ensure that you have the necessary protections to cover your liability when it comes to the specific risks involved in your recreational services business.
What To Take Away…
As a recreational service provider, it is important to know what steps you can take to exclude your liability for death and injury. This is a very complicated area, so if you’re considering how best to protect your business, give us a call or email us at email@example.com and we’ll happily help you out!