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Perhaps
the Liability Tide is Turning
....
Sporting
Clubs Contracting Out Of Liability
Recent
difficulties in sports clubs obtaining liability insurance has created
interest in the possibility of clubs contracting out of third party
liability in order to survive.
At
common law, there is nothing to stop a person from contracting out of
their liability for negligent acts when providing goods or services.
In
Neill v Fallon (1995) Aust Torts Reports 81-321 (20 February 1995),
in a Queensland Court of Appeal decision, the operators of a gymnasium
were found to have been negligent in their formulation and supervision
of an exercise regimen for a member, but they successfully defended
the claim by relying on a waiver of liability clause contained in the
membership application form.
Nevertheless,
under the Trade Practices Act, it is an implied term of every
contract between a “trading corporation” and a “consumer” that
a contract for services will be performed with due skill and care
(section 74) and the trading corporation is barred from contracting
out of this obligation (section 68).
“Trading
corporations” can include sporting clubs and the like which are
incorporated associations, but will not include sole traders, simple
partnerships or unincorporated associations.
“Trading”
denotes the activity of providing, for reward, goods or services.
A corporation will be assessed as a trading one if trading
activities form a sufficiently significant proportion of its current
overall activities. The
court will also look at the purposes, or the nature, of the
corporation.
The
Trade Practices Amendment (Liability for Recreational Services) Bill
2002,
presently before the Federal Parliament, will allow persons engaging
in inherently risky activities to assume the risk themselves, and
contract out of the statutory obligations of section 74.
It
appears that the common law position might be further eroded by State
legislation which prescribes unconscionable conduct in connection with
the supply of goods or services to another.
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In
the NSW Court of Appeal case John Dorahy’s Fitness Centre Pty Ltd
v Buchanan, Unreported NSWCA 40386/94 (18 December 1996), Dorahy,
the respondent was injured in a gymnasium as a result of defective
equipment. He has signed
a “membership agreement” which released the appellant from any
liability in negligence. But,
as that clause had not been drawn to the attention of the respondent,
the Court held, by a 2-1 majority, that the contract was unjust, as it
was “unconscionable, harsh or oppressive” within the meaning of
the Contracts Review Act 1980.
Therefore, the exclusion clause was unenforceable insofar as it
would operate to prevent the respondent suing the appellant for damages for
breach of contract and for negligence.
“Unconscionability”
provisions exist in State-based fair trading legislation.
They apply to any person in trade or commerce and do not have
the constitutional restrictions of the Trade Practices Act,
which can only be applied when a transaction involves a “trading
corporation”.
Information
extracted with permission from an article by Rick Horsely of Deacons
– www.deacons.com.au -
Deacons Insurance Update, October 2002
Further
Liability News
Senator
Helen Coonan, Minister for Revenue and Assistant Treasurer, met state
ministers in Brisbane on November 15th, 2002 to discuss the
reforms proposed by the Review of the Law of Negligence.
The ministers agreed recommendations from the Ipp Report which
establish liability should be implemented on a nationally consistent
basis as a priority. They agreed the national package “should have significant
impact on the public liability crisis and reaffirmed the importance of
insurers quickly and fully passing on the benefits of reform to
consumers.”
The
ministers will meet next April in Perth.
November
2002
Written
by Rod Hughes, CEO, IEA Brokers Pty Ltd, November 2002
The
editor of the IEA Sport Monthly Update is joint Chief Executive
Officer, Rod Hughes.
IEA
has offices in every state. National freecall number 1800 SPORT
1
(1800 77678 1)
Email:info@ieasport.com.au
Disclaimer The
information provided in this Email and on the IEA web-site is to be
used as a reference only. IEA accepts no responsibility for the
accuracy of the information or your reliance upon it. The
views of contributors are their own and do not necessarily represent
the views of IEA
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