Is the ‘indemnity’ still alive and well?

“Over the last few years I have read a number of articles that talk about the new Consumer Protection Act and how it provides protection for me, the consumer. Yet, whenever I visit a shopping centre or sign an in-store agreement, I always wonder whether these disclaimers and indemnities are really enforceable, and if so, how has my position as a consumer, been improved by such legislation.”

The world of the indemnity is a complex one, and unfortunately not always clear cut, often leaving consumer’s like you scratching their heads as to the risks they are exposed to.

Prior to the Consumer Protection Act (“CPA”), indemnities and disclaimers that excluded sellers, owners and caretakers from all risk and responsibility, and in some cases even from their own gross negligence, abounded. If well drafted, these were enforceable, although our courts have over time developed clearer guidelines on assessing the enforceability and scope of the indemnity provisions. But, nevertheless, a well drafted indemnity could largely rid a person of liability if accepted by another party.

The CPA, even though is has not outlawed the indemnity, has gone a long way to regulating the enforceability and validity of indemnity provisions. The CPA determines that it is unacceptable to require a consumer to waive any rights, assume any obligation, waive any liability of the supplier, on terms that are unfair, unreasonable or unjust, or impose any such terms as a condition of entering into a transaction. A term of an agreement is unfair, unreasonable or unjust if it is excessively one-sided in favour of any person other that the consumer; or if terms are so adverse to the consumer as to be inequitable and the consumer relied upon a false, misleading or deceptive representation etc. The CPA also restricts a supplier from making a transaction subject to any term or condition that limits or exempts the supplier from liability for any loss attributable to the gross negligence of the supplier or any person acting for or controlled by the supplier. 

But, the CPA does not outlaw the indemnity outright. It merely shackles it – limiting its scope and impact on the consumer. Suppliers can still have disclaimers and indemnities and consumers can still be bound to them, provided these disclaimers and indemnities meet the requirements of the CPA. Any provisions which in any way limit the risk or liability of the supplier, constitute an assumption of risk or liability by the consumer, impose an obligation on the consumer to indemnify the supplier for any cause, or is an acknowledgement of any fact by the consumer, must be brought to the attention of the consumer. The provision must be in plain and understandable language and the consumer must be given adequate opportunity to receive and comprehend the provision.

What remains clear, is that despite the CPA, the world of the indemnity is still thorny and requires careful treading. It remains advisable that should you have concerns about your rights as a consumer or whether your disclaimers can protect your business, you seek specialist legal advice to ensure your rights are protected and your disclaimers are legally enforceable.

October 7, 2016
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