Recoveries from removal companies: part 2 – limitations on liability
Claims against removal companies for damage caused to items that were in their control during the process of removals, transport and storage will normally be based on negligence, breach of the removals contract and bailment, which was examined in detail in Part 1.
A contract for removals, transport and storage of the claimant’s property creates a relationship of bailment between the parties. As we saw in Part 1, the common-law doctrine of bailment imposes a duty on the bailee to take proper care of those goods. If the goods are damaged when they are returned to the bailor, there is a legal presumption that the bailee has been negligent. However, any claim against a removal company, whether it is based in contract, negligence or bailment, may still be restricted or affected by the terms of the contract between the parties.
If the claimant is a consumer – rather than 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 (UCTA) (see below). A person is defined as a consumer under UCTA in the following circumstances:
- “He neither makes the contract in the course of business nor holds himself out as doing so”; and
- “The other party does make the contract in the course of a business”; and
- Where the contract is for the sale of goods or hire purchase, the goods subject to the contract “are of a type ordinarily supplied for private use or consumption”.
The removal company 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 removals companies are that:
- The contract contains a clause which excludes loss caused by negligence; and/or,
- The contract contains a clause which limits damages to a standard, set amount.
Exclusion and limitation of liability clause
The terms of the removals contract are subject to the normal rules of contract law (offer, acceptance, consideration, intention to create legal relations and certainty of terms). These areas are considered below:
- To be properly incorporated, the contractual terms must have been provided to the customer at the time that the contract is formed – Chapelton v Barry Urban District Council ;
- A clause restricting or excluding the consumer’s rights must not be hidden away or in tiny print;
- There is a duty on a company to bring to the consumer’s attention any unusual or restrictive clauses – J Spurling Ltd v Bradshaw ;
- UCTA stipulates that where loss or damage to property is involved, a contractual term cannot exclude liability for negligence unless that term is ‘reasonable’;
- The test of what is ‘reasonable’ depends on the facts of each case and the wording of the particular term;
- In determining what is ‘reasonable’, a court will consider:
- The bargaining position of each party;
- Any inducement to the customer to agree to the term;
- Whether the customer knew or ought to have known about the existence or extent of the term;
- Whether any condition placed on the customer is unreasonable.
If a removals company tries to avoid liability by relying on contractual terms, you will need to assess those terms, based on the following:
- Incorporation: Has the term they’re relying on been incorporated in to the contract? Consider at what point during the transaction the removal company provided the customer with its terms and conditions. After the removal, is not sufficient for those terms to be a valid part of the contract. Consider also whether the removal company gave them notice drawing their attention to limitation of liability clauses.
- Notice: Were the terms in question sufficiently noticeable by a customer?
- Reasonableness: In the case of removals contracts, it is relevant to consider what choice the customer had, in terms of removal companies, since many of them have very similar terms and conditions, by virtue of their membership of the British Association of Removers (BAR). This also reduces the customer’s bargaining power to negotiate more favourable terms. Some contracts stipulate that claims must be notified to the removal company within a specified time, such as seven or 14 days. It may be useful to consider how reasonable any time limit is in the context of a particular move: for example, overseas, where an unusually large amount of goods are involved or where goods are placed in long-term storage.
As a general rule, courts are less critical of clauses limiting liability than of clauses seeking to exclude liability altogether. A removal company 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/notice the company has given to this clause.
Reasonableness and the Office of Fair Trading
The Office of Fair Trading (OFT) was an organisation set up by the government to protect consumer rights. The OFT investigated consumers’ complaints and allegations of unfair contract terms, and it also made recommendations to companies to change their standard terms to remove unfair clauses. The role of the OFT is now undertaken by the Competition and Markets Authority (CMA).
Some companies may therefore have already negotiated amended terms with the OFT/CMA. If this is the case, those companies will be in a stronger position to defend the reasonableness of their terms later, should those terms be challenged in court. However, to date, the OFT’s approach to terms restricting liability in removals company’s contracts has varied, as follows:
- The OFT previously investigated the removal company, Pickfords, regarding a term in their standard contract that all damage should be notified to them within seven days of the removal or delivery. The OFT found that this was unfair. They suggested a revised term that added an option for the consumer to request a further seven-day extension to this period. However, the term in Pickfords’ standard contract limiting the amount the consumer could claim to £40 per item was left untouched by the OFT in that particular investigation.
- The OFT also looked in to the standard terms and conditions of another removal company (Bishops Move) and asked them to revise terms that excluded liability in some circumstances, as well as a term that limited their liability to £200.
Even if a contract contains a term excluding liability for negligence, there are still strong grounds for contending that a duty under bailment exists, since bailment is a remedy independent of contract or common-law negligence. The terms of the contract are still relevant, however.
Burden of proof
The standard terms adopted by most removal firms in their contracts are those produced by the 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. Terms excluding liability or limiting the amount of the company’s liability for damages may even be sufficient to reverse that burden of proof back onto the claimant. However, those terms are still open to challenge under UCTA and it is not impossible to argue against them. 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. In this regard, 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.
For more information on any of the issues raised in this article, please contact Joe Warren by emailing firstname.lastname@example.org or phoning 0117 904 5758.
Posted on Oct 21st, 2015 by Lyons Davidson