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Lyons Davidson’s Property Insurance Litigation team is often asked to pursue claims against removal companies for damage caused to items that were in their control during the process of removals, transport or storage. This article is about claims arising from those circumstances; however, the points about bailment apply equally to other relevant situations.

Legal bases of claims against removal companies

1. Breach of contract and negligence

Claims against removal companies will normally be based on breach of the removals contract. If the claimant is a consumer rather than a commercial customer, then English consumer law will imply certain terms into that contract, particularly the Supply of Goods and Services Act 1982 and the Unfair Contract Terms Act 1977.

Any negligence on the part of removal companies is likely to give rise to a claim in common law negligence for breach of a concurrent duty of care owed by the company to the claimant.

Any claims against removal companies, whether it is based in contract, negligence or bailment (see below), may still be restricted or affected by the terms of the contract between the parties.

2. Bailment

‘Bailment’ is an additional common law remedy. It arises when one party (called the ‘bailor’) entrusts their property into the care of the other party (known as the ‘bailee’). The common law doctrine of bailment imposes a duty on the bailee to take proper care of those goods. If the bailee does not return the goods to the bailor in a condition at least as good as they were in when they were entrusted to them, there is a legal presumption that the bailee has been negligent. A contract for removals, transport and storage of the claimant’s property creates a relationship of bailment between the parties.

Key features of bailment:

  • The burden of proof in bailment is materially different to a claim in contract or negligence. A claimant need only demonstrate that the goods were damaged or lost while in the possession of the bailee. Once they have done so, the bailee must prove either that they took reasonable care with those items, or that their failure to take reasonable care did not contribute to the bailor’s loss. This means that, effectively, the bailee is presumed to have been negligent unless they can prove that they haven’t been. This is why bailment is said to ‘reverse the burden of proof’;
  • A bailee is not entitled to delegate responsibility for the bailed goods to any other party without the express or implied permission of the bailor. If the bailee does so without the bailor’s permission, then they remain liable for any loss of or damage to the bailed goods, even if it occurs in the care of another party;
  • The duty of care in bailment is also wider reaching than a duty of care in the tort of negligence. So, a bailee will generally be under a duty to protect goods from theft, which would not generally be a duty in tort. The bailee will be under a duty to ensure that the bailor’s goods are kept in a place which is fit for purpose.

For an interesting example of the principles of bailment in action Yearworth v North Bristol NHS Trust [2009] in unusual circumstances…

Common defences

Removal companies will usually seek to rely on terms in the removals contract to exclude or limit the claim. The most common defences raised on behalf of removal companies are that:

  • The contract contains a clause that excludes loss caused by negligence; and/ or,
  • The contract contains a clause that limits damages to a standard, set amount.

Exclusion and the limitation of liability clause

The terms of the removals contract are subject to the normal rules of contract law. If a removal company tries to avoid liability by relying on contractual terms, you will need to assess whether those terms are reasonable in the circumstances, whether they have been properly brought to the customer’s attention and whether on the facts they have been properly incorporated into the contract.

As a general rule, courts are less critical of clauses limiting liability than of clauses seeking to exclude liability altogether. Removal companies may succeed in persuading a court that it is reasonable to have limitation clauses, since they are needed so that they can obtain insurance in the first place. The reasonableness of a limitation clause is likely to depend on how much emphasis or notice the company has given to this clause.

Burden of proof

Even if a contractual term excludes liability for negligence, there are still strong grounds for contending that a duty under bailment would still apply, since bailment is a remedy independent of contract or common-law negligence. This would place the burden of proof on the company, to prove that the loss or damage was not caused by negligence of the firm or its employees. Even if the contractual terms are sufficient to reverse that burden of proof back on the claimant in a bailment claim, those terms may still be challenged under UCTA 1977.

The bigger problem, even if a claim in bailment can be established, is that because the court will be less critical of a contractual term seeking to limit the amount of damages – rather than excluding liability for damages altogether – such a clause may still be permitted.

The standard terms adopted by most removal firms in their contracts are those produced by the British Association of Removers (BAR). It is clear that some time has been spent on producing a set of sophisticated exclusion and limitation clauses for the BAR, which will stand up to legal challenge by consumers. However, it is not impossible to argue against such terms. This is particularly true if the construction of those terms, or how and when they were brought to the attention of the consumer, can be brought in to question.

Bailment is a powerful tool in a successful recovery against removals companies. Frequently, the terms in their contracts seeking to exclude their liability or limit its consequences will be all they have to fall back on in the face of a claim in bailment. The wording of those terms, how they were presented and the timing of when they are provided to the consumer in any particular set of circumstances will be crucial to the success or failure of the claim. We will examine this aspect of claims against removal companies in greater depth in our next article.

For more information on any of the issue raised in this article or on property insurance litigation matters in general, contact our Property Insurance Litigation team or tel: 0117 904 6000.