In a previous article, the civil tort of negligence in food service establishments was analysed, explaining how staff and management should act to avoid committing the tort of negligence.
However, since human error cannot be avoided with surgical precision in every case, and it is impossible to foresee exhaustively every instance of negligent behaviour, there is the option of including an exemption clause in an agreement.
By "exemption clauses," we mean those terms by which one party to the agreement attempts to exclude or limit, wholly or partly, its liability for negligence it may exhibit.
For such clauses to be binding, they must be agreed upon in writing before the contract is concluded. Such a clause may be incorporated into the contract by reference to a prior agreement.
In the case Hollier v. Rambler Motors, it was held that the fact that the exemption clause was omitted for signature on one occasion although it had been included in other previous agreements between the parties still rendered it binding.
Furthermore, such a clause must be communicated before the contract is entered into.
In the case Olley v. Marlborough Court Hotel, the plaintiff and her husband went to the defendant company's hotel, paid, and then entered their room. Inside the room, there was a notice excluding liability stating that the hotel bore no responsibility for the loss or theft of belongings.
The Court ruled that the exemption clause printed behind the door was not binding on the parties and not part of the agreement, as it had not been brought to their attention at the time of check-in.
Additionally, such clauses are interpreted narrowly and strictly by the Court, so they must be clearly drafted and include specific reference to the particular event they seek to exclude or limit liability for.
In the case Ioannis Kokkalou & Sons v. Kanafianis, which concerned the storage of apples in a cold room by a custodian, the agreement included an exemption clause stating:
"We bear no responsibility for any damage caused for any reason whatsoever."
The Court ruled that this did not cover the custodian's negligence in failing to cool the storage properly, as there was no explicit reference to negligence.
Finally, such clauses are often deemed abusive and consequently invalid, either under Law 93(I)/96 on Unfair Terms in Consumer Contracts or under the Common Law.
An unfair term is any clause which, contrary to the requirement of good faith, causes a significant imbalance in the parties' rights and obligations to the detriment of the consumer.
This article is for informational purposes only and should not be considered legal advice.
Panayiotis G. Kyprianou
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