Lawyers highlight exclusion clause risk

Lack of explicit agreement due to conditions appearing on invoice, instead of contract, leaves carrier exposed

April 2, 2013

A conditions-of-carriage case in Western Australia has resulted in a slew of lawyers’ comments on the presentation of exclusion clauses.

The case, La Rosa v Nudrill, relates to an incident in 2001, when a drill rig fell from the low-loader.

Giuseppe La Rosa, who was the driver and transport company owner, had had a long-term but infrequent business relationship with drill-rig owner Nudrill and had been in the practice of putting terms and conditions on the back of paper invoices, while contracts were organised orally beforehand.

The relevant clause was:

"All goods are handled, lifted or carried at owner's risk. The Contractor shall not be liable for any loss or damage of property and/or goods of the Client whether such damage was caused by any act, default or negligence on the part of the Contractor, and/or his servants."

But the WA Appeal Court judge backed the original judgement that La Rosa was not entitled to infer that these conditions were agreed to by Nudrill.

This was in part due to the conditions being on the back of the invoice, where a "reasonable person" would have been expected to find a call for payment rather than contractual terms.

This point was highlighted by lawyers.

"In short, there was nothing to objectively show that Nudrill, in receiving the invoices, accepted (or ought to be deemed to have accepted) the terms contained in them," Holding Redlich senior Associate Bede Haines writes.

"No doubt the situation would have been different had the terms, or at least their existence, been drawn to the attention of Nudrill prior to the job being complete."

Commenting lawyers conclude that producing clauses later, once a contract is entered into, is a risky move if anything goes wrong.

"This case clearly warns contractors of the dangers of inserting terms and conditions of their engagement after the contract had been formed," lawyer Selva Veeriah says.

Cooper Grace Ward Special Counsel Gillian Bristow makes a similar point.

"A carrier is not entitled to conclude from the actions or conduct of its customer that the customer has accepted and agreed to be bound by printed conditions on a tax invoice delivered after performance of the contract," Bristow says, emphasising ‘after’.

"Carriers should ensure that their conditions of carriage are contained in a contractual document, such as a consignment note or quotation, and are signed or otherwise acknowledged by customers before the carrier transports goods.

"The safest course of action is for carriers to have a single written contract with their customers that applies to all transport services provided by the carrier.

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