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Posted: 2005-01-16 / Author: Andrew Woolley

Limiting Liability With A Consumer

In this Factsheet, we are looking at limiting liability when dealing with consumers. Other Woolley & Co Factsheets illustrate that to limit liability in a contract you need to time exactly correctly when the terms doing so get into the contract i.e. before it is made. All we’ll say here on that subject is just a reminder that if you don’t get the terms properly in front of the consumer then you may as well not have them at all. Some people disapprove of limiting liability at all. We don’t understand that view. If, for example, you sell a widget for £50 to someone who puts it into a conveyor belt which goes wrong and stops a factory’s production for a few days you might have a £100,000 claim for a £20 profit. That should surely have been limited. And the good news is it can be done.

But many people think you can limit liability for anything. You can’t.

Many of us will be dealing with consumers especially when selling from websites and then you simply cannot limit your liability for personal injury or death caused by negligence. Nor can you restrict their statutory rights**. If you do either of these things you are at great risk of the whole attempt at restriction being disregarded and even interest from trading standards and/or the OFT! And any other limiting you do has to be reasonable.

We see many examples where people have copied others who have copied others who have…. They are often totally ineffective contracts so far as limiting liability is concerned, indeed some are illegal. Basically (as we’ve just seen) if you over-limit liability the whole clause that is on this point is ignored—so do be careful. In every case, your terms have to be fair so e.g. something (which we’ve often seen) saying words to the effect of “If this doesn’t work we won’t be liable” will probably be void for unfairness.

So, you have to get the positioning of the terms right and also get the wording right. There are many ways of dealing with these issues and we could all do with some official guidance—taking what some might call an extreme view, the OFT have just published guidance on how to deal with these issues on-line. The guidance is about 75 pages long if you’re interested! It’s here:

www.oft.gov.uk/News/Publications/Leaflet+Ordering.htm
The basics of what they suggest (it is of course heavily consumer biased but you can at least see how they might view you if there was a complaint) are:

Intriguingly they suggest we shouldn’t put “I have read and understood the terms and conditions” as we all know they haven’t! Instead it is said there should be a warning to them to ensure they do read them and that they contain the legal contract that applies if they go ahead—(Microsoft XP does the former I have just noticed!)

Don’t use words like “statutory remedies” as the OFT think these are not understood and are thus unfair.

Don’t use typical complex legal wording. (See our Factstheet on this)

Most terms need to be in a “durable medium” so best that any can be printed off and/or permanently stored.

**These are rights such as the right that the thing bought should be good for the (disclosed) purpose it’s bought for, decent quality etc. You might be amazed how many terms suggest the opposite can occur!

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Articles Supplied By: Andrew Woolley from Woolley & Co - email:info@e-lawfirm.co.uk. www.e-lawfirm.co.uk


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