No one wants accidents to happen on their premises and since the introduction of the CPA, businesses have had to review their disclaimers. Douw Breed takes a look at clauses in customer agreements about liability limitation.

Section 49 of the CPA requires a supplier to draw consumer’s attention to all provisions in disclaimers that limit the supplier’s risk or liability. Any risk or liability assumed by the consumer must also be made clear. Apart from further obligations and restrictions imposed on the supplier, these disclaimers and indemnities must be conspicuously displayed in plain language. Importantly, they also may not exclude liability in the case of gross negligence.

A SPOT OF BAD LUCK

Why would an indemnity still need to be drafted in the post- CPA era? For example, a customer walks into a shop and, after seeing the disclaimer behind the counter, signs an agreement where the liability of the shop, it’s owners and employees are excluded if someone suffers loss or damages resulting from something beyond their control. After the customer signs, a ladder, which an electrician is using to make repairs, falls over and hits the customer on the head. The customer suffers brain damage and with it medical expenses and loss of income. The shop owner rightfully fears that he may have no defense against a damage claim because of the provisions of the CPA.

COVERED BY THE CPA

Clear reference should, however, be made to the actual application of the CPA. Section five of the Act determines that it applies to every transaction in the Republic of South Africa. The CPA defines a transaction as an agreement between parties, or at the direction of the one party, for the supply of goods or services in exchange for consideration. Furthermore, the Act proposes to promote and advance the social and economic welfare of consumers in South Africa.

In light of the above, the incident that occurred in our example is not a transaction as meant in the CPA and so does not fall under the Act. It is further clear that the purpose of the Act is not to regulate the relationship of parties if it is not of supplier and consumer. Should the customer, however, suffer any damages as a result of the goods sold or services rendered to it by the shop owner, the position would in all probability be different and an all-excluding disclaimer could prove to be null and void in terms of section 49 of the Act. In our example, the customer could institute a delictual action against the shop owner or its employees. The court would, in these circumstances, have to weigh the wording to the disclaimer or indemnity clause. It is also not against public policy that an exemption provision in a disclaimer or limitation of liability clause excludes liability for gross negligence. This was reaffirmed in Government of the Republic of South Africa and Fibre Spinner and Weavers. In the shop scenario, one could assume that the customer, as a plaintiff in a damages claim, would rely on the gross negligence of the shop owner as the court would more likely find in his favour had the shop owner or his employees been grossly negligent. This would be the first hurdle, only to find that the court then has to take notice of a disclaimer excluding liability for gross negligence.

The CPA era leaves businessmen with no option but to revise their disclaimers and exemption clauses in agreement with their customers. However, before unnecessarily excluding any exemption provisions in their disclaimers, they should develop two distinguishable disclaimers with an attorney; one to cover transactions, and one toe cover other general incidents.

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