A wide range of businesses that offer recreational services to their customers which come with a level of risk. These services can include gyms, rock climbing centres and bungee jumping, all of which can result in serious injury or even death.
If your business provides a recreational service which has a level of risk, it is imperative that your terms and conditions protect you from these risks. Otherwise, in the case of injury or death there is a chance of being sued and liable for large sums of money.
Clauses within your business’ terms and conditions may exclude your liability for injury and death. Actually excluding liability is difficult as the laws pertaining to this area are quite complex.
Prior to attempting to create any exclusion clauses into your terms and conditions, you must first understand what they are and how they can be used to protect you.
What is an exclusion clause?
An exclusion clause is part of a business’ terms and conditions and has the potential to exclude your liability in case something goes wrong while your service is being used.
Exclusion clauses are generally found in contracts and are especially common for businesses that provide recreational services.
Putting an exclusion clause into your business’ terms and conditions can be difficult as a result of laws and regulations which vary from state to state. This is an ever complex issue in Australia due to the interaction between negligence law and the Australian Consumer Law (ACL), as well as the existence of different defences in each state and territory Civil Liability Acts.
As such, negligence, ACL and the Civil Liability Act all require careful consideration prior to inserting an exclusionary clause.
Negligence
Negligence law is a complex topic involving a duty of care owed by service providers to customers. Recreational service providers owe a duty of care to their clients that the services provided will be of a certain standard and that you will not be negligent in providing such services.
If a contract includes an exclusionary clause and is drafted correctly you may exclude liability for negligence. However, where your negligence is also in breach of a consumer guarantee under the Australian Consumer Law, there are very specific provisions on how your liability may be limited.
Excluding the consumer guarantees under the ACL generally means you will also exclude your liability for negligence.
Australian Consumer Law
Consumers are protected by the ACL when they purchase goods and services, as the ACL provides them with various rights and guarantees.
The onus is on your business to guarantee that services are provided to consumers with a certain level of due care and skill. People who suffer injuries while using your services, as a result of your negligence, may sue your business for failing to comply with the ACL’s guarantees.
Generally, consumer guarantees cannot be contracted out of. However, recreational service providers are able to exclude their liability under the ACL where the liability is related to injury or death. This rule is limited. For example, recreational services providers are not protected in such circumstances where your business has displayed recklessness.
It is also important to consider the state in which your business operates. Certain state legislation requires specific wording in business contracts to effectively limit your business’ liability in the case of death and injury under the ACL.
The Civil Liability Act
Each State and Territory in Australia has a different Civil Liability Act (CLA).
The CLA sets out a regime in each State or Territory and may have notable impacts on businesses, especially recreational service providers. Depending on where your business operates, you may be able to use a risk warning, pursuant to the CLA, to exclude your liability.
Excluding liability may be difficult to do for a number of reasons. For example, subject to the CLA in Western Australia, a risk warning is effective where it 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 legislative instruments can be very confusing. Accordingly, a careful assessment of the risk you are warning the consumer of and consideration of prior case law is strongly suggested in order to create a risk warning that will effectively protect you.
Retaining a lawyer to assist you through the process will ensure liability is effectively excluded in relation to specific risks involved in the recreational services offered by your business.
Key Takeaway
As a recreational service provider, including an effective exclusionary clause can be quite difficult and must be done with great caution. Excluding liability for injury and death can be very complicated, so it is best to gain professional help to best protect your business.
If you need assistance with a Profit Share Agreement or any other commercial law issue, contact our team of commercial lawyers via the form on this page or by calling 1300 337 997
Phil is a director at OpenLegal. He has over 16 years experience working in private practice and in-house counsel in Sydney and London, giving him expertise in employment law, IP, finance, leases, dispute resolution, insurance and contracts.
