Terms of Trade and Exclusion Clauses
November 2014
Recent cases we have dealt with and are dealing with have once again highlighted the importance of businesses paying attention to their own terms of trade. This is a topic that we have looked at on other occasions and it continues to be an area of concern for many of our clients.
Recent cases have highlighted how awkward it can be if your terms of trade do not cover some of the risks that you might face in your business. For example:
(a) where you are acting only as an agent in providing services to someone which might be dangerous, you need to ensure that not only
your own terms of trade properly exclude liability, to the fullest extent possible or desirable but that the client or customer is aware
that the risk of the danger falls somewhere else, not upon you.
(b) other exclusions that are critical arise where there might be multiple persons involved in providing a product or service. These
situations need to be considered closely and appropriate terms of trade used so that you do not find yourself liable for someone else’s
failure, simply because you were a “middle” supplier, or wholesaler; and
(c) care is also needed because some obligations cannot be excluded and by purporting to do so, that of itself can offend the misleading
and deceptive conduct provisions of the Australian Consumer Law, giving rise to the clauses being void and possible monetary
penalties.
The Australian Consumer Law has provision in it to sheet home the ultimate manufacturer of goods liability for defective goods. The same thing does not usually apply to services but can do in some circumstances, such as where the consumer makes their particular needs aware to the wholesaler, through the retailer. That does not mean to say that you as the person somewhere in the middle of the chain of suppliers need to accept responsibility but to ensure that you do not, it is important to provide in your trading terms appropriate exclusions and ensure that your terms are properly accepted by your customers. If you are at risk then you need to understand that risk and take out appropriate product, public and professional liability insurance.
John Graves
Principal
Bradfield & Scott Lawyers
Level 1, 175 Macquarie Street
Sydney NSW 2000
Telephone: 9233 7299
Email: jgraves@bradscott.com.au
Recent cases have highlighted how awkward it can be if your terms of trade do not cover some of the risks that you might face in your business. For example:
(a) where you are acting only as an agent in providing services to someone which might be dangerous, you need to ensure that not only
your own terms of trade properly exclude liability, to the fullest extent possible or desirable but that the client or customer is aware
that the risk of the danger falls somewhere else, not upon you.
(b) other exclusions that are critical arise where there might be multiple persons involved in providing a product or service. These
situations need to be considered closely and appropriate terms of trade used so that you do not find yourself liable for someone else’s
failure, simply because you were a “middle” supplier, or wholesaler; and
(c) care is also needed because some obligations cannot be excluded and by purporting to do so, that of itself can offend the misleading
and deceptive conduct provisions of the Australian Consumer Law, giving rise to the clauses being void and possible monetary
penalties.
The Australian Consumer Law has provision in it to sheet home the ultimate manufacturer of goods liability for defective goods. The same thing does not usually apply to services but can do in some circumstances, such as where the consumer makes their particular needs aware to the wholesaler, through the retailer. That does not mean to say that you as the person somewhere in the middle of the chain of suppliers need to accept responsibility but to ensure that you do not, it is important to provide in your trading terms appropriate exclusions and ensure that your terms are properly accepted by your customers. If you are at risk then you need to understand that risk and take out appropriate product, public and professional liability insurance.
John Graves
Principal
Bradfield & Scott Lawyers
Level 1, 175 Macquarie Street
Sydney NSW 2000
Telephone: 9233 7299
Email: jgraves@bradscott.com.au
