Exclusion Clauses – Are you really safe?

The Supreme Court of Western Australia recently determined an appeal involving the transportation of a drill rig that was damaged when it fell from the low-loader trailer carrying it, onto the ground.

The transport company unsuccessfully tried to rely upon an exclusions clause being incorporated into the oral contract between the parties.
The Respondent had engaged the Appellant to transport various pieces of equipment over a number of occasions. Each engagement started with a telephone conversation which discussed matters of price, destination, pick up and time.

At the completion of each job, the Appellant would send an invoice to the Respondent with a reference to TERMS on the front of the invoice stating that ‘the terms and conditions set forth on the reverse side of this invoice are fully acknowledged and understood’, and on some invoices a further inclusion of ‘goods are not insured unless required in writing’.

Contained in these terms and conditions was an exclusion of liability by the Appellant for any damage.

It was found that the terms and conditions on the reverse side of the invoice weren’t incorporated into the carriage contract as there was ‘no evidence to show at any
time that a contract was preceded by any quotation or other paperwork continuing terms intended to form part of a contract then to be formed’.
What this means for you Exclusion clauses contained in a ticket or unsigned document cannot be relied upon unless when the contract is formed, you do everything that was reasonably necessary to notify the other party of the clause.

Ways to ensure your terms are properly included:
• At the time of contracting, or shortly after, make sure you refer the other party to your terms and conditions;
• Send a document to the other party prior to performance of the contract and make reference to the terms and conditions, and more specifically, your exclusion
clause;
• Send the other party your terms and conditions and highlight the exclusion clause;
• Obtain acknowledgement or acceptance from the other party by requiring them to sign next to the relevant clauses, or sign an acceptance document that must be returned prior to performance of the contract;
and
• Review your terms and conditions to make sure they are appropriate for risks relevant to your business.