Disclaimers the Freedom to Contract and the Consumer Protection Act

We encounter disclaimers, exclusionary and exemption clauses everyday. People are often left with very little bargaining power especially when they are induced to sign a disclaimer.

A disclaimer excludes liability on behalf of a person/business for damages suffered whilst being on the institutions’s premises. Disclaimers are often problematic as the scope they cover is extremely wide, and often includes all forms of negligence.

Historically, disclaimers have been upheld on the notion of ‘freedom to contract’, which has been held in high esteem by the courts. Where disclaimers have been against public policy, they have been struck out, limited or interpreted narrowly. 

The 2012 case of Naidoo v Birchwood Hotel confirmed that property owners have a duty to protect others who enter their property. In this case, Naidoo was injured on a hotel’s premises when a gate fell on top of him. The court ruled in favour of Naidoo for the full amount of damages claimed, despite him having signed a hotel register which stated “please read terms and conditions on the reverse”. There were also also signs outside that excluded the hotel for all liability.

The court confirmed that although generally persons who enter into contracts are bound by the ordinary meaning of the words, when a contract is entered into in the form of a disclaimer, the onus arises not on the signatory but on the other party to draw the signatory’s attention to the terms and conditions. The judge looked at the facts of the case and stated that to enter a hotel is an integral part of one’s stay, and to deny one judicial redress for injuries suffered arising from the negligence of the hotel offends the notion of justice and fairness. 

The court referred to a Constitutional Court case where it was held that the court will bear in mind the need for freedom of contract, but will not let blind reliance on this principle override the need to ensure that contracting parties must have access to courts.

The effect of decisions such as that of the Naidoo case are in line with the  purport of the Consumer Protection Act whereby consumers’ rights often cannot be waived or deprived even by agreement. These decisions are far reaching as they would cover even exemption clauses signed upon entering a hospital for treatment. They raise the bar for protecting one’s business against being negligent.

Public liability insurance should thus be taken to protect owners who’s businesses involve a degree of risk. It is noteworthy that visitors may also even sue home owners for injuries suffered at one’s home.

We advise that you always make sure that your disclaimers are visible and understandable, whilst bearing in mind the need to guard against negligence as far as possible. In order to prevent risk, measures should be taken in all environments, especially the workplace.

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