Unfair Contract Terms And The Consumer - Case Analysis

The Case Overview

Describe about the Unfair Contract Terms and the Consumer.

The issue that has to be decided in this case arises on the basis of the facts that Drew Breeze wanted to climb the Sydney Harbour Bridge so that he can see the spectacular view of the city. But when Drew started the climb, there was thick fog. Janet, an employee of SCST assured Drew that the fog always lifts during the day and definitely, it will be gone by the time Drew climbs and reaches the top. However when Drew reached the top, there was thick fog. Moreover, when he was climbing down the bridge, Drew slipped and fell 3 meters as the safety straps provided by SCST were badly worn and therefore they came apart when Drew fell. However when Drew asked for a refund, SCST claimed that they cannot control the weather. At the same time, when Drew claimed his medical expenses of $2900, the company refused to pay and pointed out towards the contract between them. According to clause 45 of the contract that has been mentioned on the second page, it was stated that the parties acknowledge that the standard terms and conditions of SCST applied to this contract. The standard terms and conditions of the company have been permanently mentioned in their office. However these terms and conditions have been located in a wall under a coat rack. One of the terms provided that the company or its employees will not be liable for any injury or damage suffered by the customers.

Under these circumstances, the issue arises if the exclusion clause is applicable in this case and if Drew can claim compensation for his loss and medical expenses.

A disclaimer that is present in a contract can be described as clause with the help of which, one party to the contract tries to limit the application of some terms of the contract audit otherwise denies the right or the liability of the party under the contract. An example in this regard can be given a situation where a party wants to clearly express that it does not give any warranty or representation regarding the accuracy or the completeness of any information provided by it (Darlington Futures v Delco Aus., 1986). However, such a disclaimer will not be considered as effective if it can be established by the other party as a question of fact that certain representations were made.

Exclusion Clause and Its Validity

An exclusion clause also operates in the same way as it tries to exclude or limit the liability of a party under the contract. For instance, a party may want to exclude its liability regarding a particular matter to the extent that is permissible under the law or such party we want to exclude its liability for negligence or want to qualify the rights of the other party in case of a breach of contract (Davidson, 2007). At this point it needs to be mentioned that the law does not allow a party to exclude its liability in case of fraud or he cannot contract out of the applicable laws.

In this way, it can be said that generally an exclusion clause is present in writing and it provides that one party will not be held liable in case of a certain happening. Therefore, for instance it has been commonly seen that when a person goes to the gym, the contract mentions that the owner of the gym will not be liable in case the person suffers an injury while exercising. In the same way, when a fee has been paid to park the car at a public car park, the owner of the car park may try to exclude its liability by inserting a clause in the contract according to which the owner will not be liable in case any damages suffered by the car.

It needs to be noted that an exclusion clause is valid and enforceable under the law if such a clause has been properly inserted in the contract and at the same time, the clause is not contrary to law (Howell, 2006).

In order to be properly incorporated in a contract, an illusion clause cannot be inserted in the contract after the contract has been concluded between the parties. Therefore in case of a signed contract which contains the exclusion clause, generally it will be considered that the clause is a part of the contract (Horrigan, 2004). On the other hand, if the parties have not signed the contract, but there are certain printed documents on signs that have been posted, which mention the terms, such a clause can only be considered as a part of the contract if it has been brought to the notice of the other party before the contract has been made.

An example in this regard can be given of the case titled Thornton v Shoe Lane Parking Ltd. (1971). In this case, a driver has to take a parking ticket from a ticket vending machine at the time of printing the car park. The court stated that the driver will be bound only by the terms that have been brought to snow days before taking the ticket. The reason is that according to the law of contract, contract is created between the parties and the ticket is taken. Therefore the owner of the car park cannot rely on the exclusion clause that has been mentioned on the back of the ticket if it has not done anything beforehand to make the drivers aware of the presence of an exclusion clause. For example in such a case, the exclusion clause would have been prominently mentioned at any point before the ticket is taken. Hence in such a case if the car is damaged as a result of the negligence of the employees of the parking company, the owner of the car park will be held liable even if it has mentioned an exclusion clause.

Enforceability of Exclusion Clause

However, what are the reasonable steps that need to be taken in order to draw the attention of the other party towards the presence of an exclusion clause, varies from case to case (Griggs, 2005). For example, these days in case of most of the car parks, there are printed signs at the front of the ticket window according to which, the car park will not be liable for any damage caused to the cars that have been left on the premises.

Another requirement regarding the enforceability of an exclusion clause is that the clause should be lawful. In this regard, certain significant obligations have been imposed by the law towards the customers. These obligations can be implied by statute (Australian Consumer Law) in case of consumer contracts and therefore, these obligations cannot be excluded by adding a contractual term to that effect.

It also needs to be mentioned at this point that generally the courts give the narrowest possible rating to an exclusion clause. Therefore in case of a doubt, the courts adopt the interpretation that is most favorable for the consumers. At the same time, generally an exclusion clause will not cover a breach that has taken place outside the four corners of the contract, for example when something has been done by the other party that was not authorized under the contract.

In the present case, Drew has entered the contract on the basis of the representations made by Janet, an employee of SCST. However, on the second page of the contract, clause 45 mentions that the parties will be bound by the standard terms and conditions of the company. On the other hand, the standard terms and conditions of SCST have been displayed at the office of the company. Moreover, these terms and conditions have been placed on a less conspicuous place on a wall of the office. According to one of the terms, it has been mentioned as the company or its employees or represented this cannot be held liable for the injury or the damage that may be suffered by the customers. However in this regard it needs to be noted that this term cannot be considered as a part of the contract between Drew and the company. The reason is that this clause is not a part of the signed document. Moreover, no efforts were made by the companies bring this clause to the notice of Drew before he had entered into the contract with SCST. It also needs to be mentioned that the clause was not seen by Drew before he had entered into a contract with SCST.

Therefore in this case, it can be said that SCST cannot rely on his term and conditions in which it has been mentioned that the company will not be liable for any injury or damage suffered by the customers.

References

Davidson, J. (2007) ‘Unfair Contract Terms and the Consumer: A Case for Proactive Regulation?’ 15 Competition and Consumer Law Journal 74

Griggs, L. (2005) ‘The ‘(Ir)rational Consumer and Why We Need National Legislation Governing Unfair Contract Terms’, 13 Competition and Consumer Law Journal 51

Horrigan, B. (2004) ‘The Expansion of Fairness-Based Business Regulation – Unconscionability, Good Faith and the Law’s Informed Conscience’, 32 Australian Business Law Review 159

Howell, N. (2006) ‘Catching Up with Consumer Realities: The Need for Legislation Prohibiting Unfair Terms in Consumer Contracts’, 34 Australian Business Law Review 447

Case Law

Darlington Futures v Delco Aus (1986) HCA 82

Thornton v Shoe Lane Parking (1971) 2 WLR 585