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10 Things Every Business Needs to Know About Liability Waivers - the Most Thorough Free Guide to Lia


1. Does my business need a waiver of liability?


A liability waiver is an important document for any business providing recreational services to consumers.


This is especially the case for businesses providing activities with an obvious risk of injury – think surf schools, sky-diving operators, personal trainers, gyms and rock-climbing centres.


Even when the risk of injury is not so obvious, most recreational activities do come with some risk of injury, even if the activity is something you would ordinarily think of as ‘safe’.


A participant in a cooking class might accidentally cut their finger with a knife, for example. Nobody would call cooking a dangerous recreational activity, but injury is still possible.


If you can think of some way a customer might possibly be injured through participating in an activity your business hosts or conducts, you should think about putting in place a liability waiver.


Occupiers of premises should also consider a liability waiver form if they are permitting people to use their premises for recreational activities.


2. What exactly is a liability waiver?


A liability waiver is a contract between your business and a customer.


The contract includes a disclaimer from your business and an agreement by the customer to limit or waive his or her right to claim damages from your business should they suffer injury or death in participating in an activity provided by your business.


If an injury does occur, you may be able to rely on the waiver to prevent the customer from recovering compensation from your business.


3. What are the benefits of having a waiver?


Limiting liability


The obvious benefit of a liability waiver is limiting your business’ liability exposure.


For many recreational activities there is an inherent danger of accidental injury. Participants know they are engaging in a dangerous activity with a risk of accidental injury.



If you have ever been skiing, you will know how easy it is to fall. Skiing injuries such as broken bones, sprains and dislocations are inherent dangers of the activity.


If ski fields or ski schools could not rely on liability waivers and had to pay compensation for every injury sustained, they’d soon be out of business.


A waiver attempts to apportion the risk of someone suffering loss through injury between a business and a consumer.


A balance is struck between the expectations that:


(1) consumers should take some personal responsibility for their choice to participate in an activity with inherent dangers; and


(2) businesses should provide recreational services safely.


The extent to which liability can be limited depends on a number of factors which we will look at further below.


Deterring Claims


A waiver may serve to deter a customer from taking legal action against your business.


It is much better for a business to avoid claims altogether than it is to have a claim end up in court.


Once you are in court you may win the case due to your waiver or for some other reason, but not being in court in the first place is obviously the better place to be.


Notification of expectations


A liability waiver is also a good way to notify your clients what you expect from them as a condition of their participation in an activity.


For example, you might set out your expectations that the client will:


  • truthfully advise you of any medical reason why they should not participate in the activity;

  • follow your instructions;

  • wear the safety equipment you provide them;

  • ask for help if they need it; or

  • not engage in any risky behaviour.


If a client is injured due to their failure to follow your instructions or wear the safety equipment you provide, the fact you have included these requirements in your liability waiver will help when it comes to assessing whether your business is at fault for the injury.


4. Will a liability waiver completely cover my business from all liability?


If your liability waiver is correctly drafted it should, depending on the type of activity involved, protect your business from claims arising from injury or death caused by a failure by your business to exercise reasonable care and skill in providing the services.


Civil claims for personal injury are usually based in the tort of negligence or in breach of contract.


If someone is injured because of something your business has done or failed to do, you may be found to be negligent due to the failure to provide the services with due care and skill.


You may also be found to have breached the contract with your customer, due to contractual terms implied by Australian law.


Implied warranties


Despite what you may attempt to exclude in the terms and conditions of your customer contract or liability waiver, there are warranties implied by Australian statute law.


The provision of recreational services – experiences, instruction, guidance, event hosting – is usually considered to be the provision of a ‘service’ rather than the provision of ‘goods’.


The Australian Consumer Law (the ‘ACL’) implies certain warranties into contracts for the provision of services. These are found in sections 60 to 62.


Section 60 of the ACL implies a warranty that services will be rendered with due care and skill.


Section 61 of the ACL implies a warranty that services will be fit for the purpose for which they are acquired by the consumer.


Section 62 of the ACL implies a warranty that services will be supplied within a reasonable time.


These implied warranties cannot be excluded, except in limited circumstances, discussed below.


Accordingly, waivers like the one below, which simply disclaim all responsibility for the provision of services will be ineffective:


we accept no responsibility for loss or damage to person or property through any cause whatsoever.


The implied warranties in the ACL would override the above disclaimer.


Section 267 of the ACL goes on to provide a customer the right to recover compensation from a business for any foreseeable loss caused by a failure by the business to comply with the implied warranties in either section 60 or 61.



Excluding the implied warranties


The Australian Competition and Consumer Act (‘the CAC Act’) allows for the exclusion of the implied consumer services guarantees of the ACL in limited circumstances.


Section 139A(1) of the CAC Act provides that a term of a contract for recreational services is not void only because it excludes, restricts or modifies the implied warranties.


Section 139A does not apply unless the exclusion, restriction or modification is limited to personal injury (mental or physical injury, disease or condition) or death.


A waiver that attempts to exclude liability for property damage as well as injury or death will fall foul of section 139A and is likely not to apply to exclude liability for any type of loss or damage.


It is important for liability waivers to limit the exclusion of liability to personal injury or death only.


It is not uncommon to see liability waivers that adopt the exact language used in section 139A to take full advantage of the exceptions permitted by section 139A.


This is also the approach we take to liability waivers at Clearly Legal.


Not all activities are ‘recreational services’ – CAC Act


To know whether the activity provided by your business will be covered by section 139A, you will need to assess whether it is a ‘recreational service’ as defined under the CAC Act.


Recreational services are defined as services that consist of participation in:


(a) a sporting activity or similar leisure time pursuit; or

(b) any other activity that:

(i) involves a significant degree of physical exertion or physical risk; and

(ii) is undertaken for the purposes of recreation, enjoyment or leisure.


Activities such as sewing classes are unlikely to fall within that definition of ‘recreational services’ because they are not similar to sporting activities and they do not involve physical exertion or a significant risk of physical injury.


Businesses that provide these more ‘inactive’ types of recreational activities are unlikely to be able to rely on section 139A of the CAC Act to exclude the implied warranties in the Consumer Law.


Wrongful acts


There are some instances where a waiver, no matter how carefully it is drafted, will not protect your business against liability. If injury or death is caused by an act or omission by your business that is:


  • fraudulent;

  • unlawful;

  • intentionally wrong; or

  • considered to be reckless conduct,


a waiver will not protect your business.


Reckless conduct


Section 139A(5) of CAC Act explicitly excludes ‘reckless conduct’ from the protections of section 139A.


The conduct of a business will be reckless conduct if the business is aware, or should have been aware, of a significant risk of injury and engages in the conduct regardless and without justification.


Section 139A(5) attempts to balance the interests of businesses and consumers.


Waivers will not protect your business if you don’t act to avoid known risks of significant injury.


Civil Liability Act 2002 (NSW) (‘CL Act’)


There is another statute in New South Wales that provides businesses with some protection from personal injury liability. Other states have similar legislation.


Under section 5L of the Civil Liability Act 2002 (NSW) (‘CL Act’), a business is not liable in negligence for harm suffered by a participant as the result of the materialisation of an obvious risk of a dangerous recreational activity.


The section applies even if the participant is not aware of the risk.


Recreational activity – CL Act


Under the CL Act, the definition of ‘recreational activity’ is much broader than the CAC Act definition of ‘recreational services’ and includes any sport (whether or not it is an organised activity), any pursuit or activity engaged in for enjoyment, relaxation or leisure.


This definition would likely include such activities as sewing classes.


A ‘dangerous recreational activity’ is defined as a recreational activity that involves a significant risk of physical harm.


Risk warnings


Under section 5M of the CL Act, if a business gives a participant warning of a risk of the activity, the business does not have a duty to take care in respect of that risk.


A risk warning may be given orally or in writing.


A written risk warning may be provided by signage or in a liability waiver or other document.


Whilst it is not a requirement to establish that a participant received or understood the warning, it must be given in a way that is likely to result in people being warned before participating in the activity.


A liability waiver is a good place to set out the risks of the activity. A participant may deny having seen or being given an opportunity to see a warning sign at an activity venue, but they will have difficulty arguing that they did not have an opportunity to see the warning if it is contained in a signed liability waiver.


What constitutes a sufficient ‘risk warning’ has been considered by the courts in a number of cases.



In Motorcycling Events Group Australia Pty Ltd v Kelly [2013] NSWCA 361, a participant in a motorcycle training course was seriously injured when struck by another rider travelling at a higher speed in a more advanced class.


The risk warning relied upon by the provider of the recreational services was contained in a registration form:


“ACKNOWLEDGEMENT OF DANGER AND RELEASE FROM LIABILITY

The Applicant/Guardian knows that motorcycle activity/riding is a dangerous recreation and that participation in the activities… will expose the Applicant to the risk of serious injury or death. This possibility of injury or death can happen because of mechanical equipment failure, the Applicant's own actions while riding, track and weather conditions, the actions or failures to act of other people, including other riders on the track with the Applicant, or any combination of these or other factors.


The Applicant/Guardian recognises that the Applicant may be injured or killed as a result of the Applicant's own or someone else's negligence, either active or passive or by an equipment failure of the sort which would permit suit against a manufacturer or supplier on a theory of strict (product) liability.

...

the Applicant is prepared to take the Applicant's chances of injury, death or property damage, and assume the risk that the Applicant may be injured or killed while participating in the school or ride day activities.


Oral warnings were also given to the participant during instruction on the course.


The Court of Appeal found that a sufficient risk warning had been given.


Section 5M(5) provides that the risk warning does not need to be specific to the particular risk and can be a general warning of risks that include the particular risk concerned.


In Alameddine v Glenworth Valley Horse Riding Pty Ltd [2015] NSWSC 219 a minor was injured in a quad biking accident.


The accident was found to have been caused by the instructor riding at excessive speed.


In Alameddine, the risk warnings contained in a liability waiver form and on signage were found not to be effective because the risk of injury due to an instructor riding too fast was not a risk of the activity.


The court stated that the risk had to be inherent to or incidental to the activity.


It would not matter if the service provider had expressly stated the risk of an instructor driving at excessive speed in the warning if it wasn’t a ‘risk of the activity’.


CL Act vs CAC Act


Section 5N of the CL Act allows a clause in a contract to exclude, restrict or modify any liability that results from an express or implied warranty that the services will be rendered with reasonable care and skill.


Section 5N is clearly at odds with section 64 of the CAC Act, which does not allow for the implied warranties to be waived by a clause in a contract.


This means that if an exception is not available under section 139A of the CAC Act, section 5N of the CL Act cannot be relied upon.


Recreational activity – CL Act


Under the CL Act, the definition of ‘recreational activity’ is much broader than the CAC Act definition of ‘recreational services’ and includes any sport (whether or not it is an organised activity), any pursuit or activity engaged in for enjoyment, relaxation or leisure.


This definition would likely include such activities as sewing classes.


5. Is a liability waiver legally binding?


There are several factors to consider to ensure your liability waiver is legally binding and enforceable.


Time of signature


When does a waiver need to be signed?


Ideally the waiver should be signed or electronically accepted as part of the terms and conditions of the activity at the time the activity is booked and payment is made.


This is to ensure there is no doubt about whether the waiver forms part of the contract for the services.


In practice, many businesses will present a waiver to a customer just prior to the activity commencing and well after the activity has been paid for.


Depending on the facts surrounding the booking of the activity, a waiver signed after the fact may or may not apply.


If a waiver is presented after the fact, it may be considered a separate contract, for which there is no consideration given.


A contract without consideration is not a contract at all and will not be enforceable.



In the case of Lightfoot v Rockingham Wild Encounters Pty Ltd [2017] WADC 62, the Western Australian Supreme Court considered whether a waiver for participation in a dolphin cruise, signed the day after the tour was booked, formed part of the contract.


The Court found that the waiver was a part of the contract.


Some of the factors that lead the Court to this decision were:


  • the booking website clearly stated a waiver would need to be signed for the customer to participate in the cruise. This requirement was a term of the contract;

  • there was a link to the waiver on the website so consumers had ample opportunity to read it before making their booking; and

  • the participant had been on the cruise before, knew the procedure and was aware that she needed to sign the waiver to get on the boat.


The opposite was decided by the New South Wales Supreme Court in the Alameddine case (referenced above).


The participant was a minor and her mother had booked and paid for the quad-biking experience over the phone the day before the activity.


On the day of the quad-biking activity, the participants were presented with an ‘application form’ to sign, which contained a liability waiver.


The Court of Appeal found that the contract had been formed on the date of booking and that the subsequent signing of the application form did not incorporate the terms of the liability waiver into the contract.


Consumer not reading waiver in detail


Where a consumer has signed a waiver without first reading it, the waiver will generally be binding unless there is some element of misrepresentation, duress, fraud or mistake.


A business is entitled to rely on a customer’s signature and is not required to prove that a customer has read or understood a liability waiver.


Including a statement above the signature line or before the click-to-accept box, to the effect that the waiver of liability should be read in its entirety before signing, will assist to avoid any doubt over whether the terms were accepted by the customer.




6. Can I copy a waiver from someone else’s website?


You should never copy a legal document from another website. There are a number of reasons why.


1. Copying the text of another business’ waiver could be a breach of copyright.


2. The waiver may not be appropriate for the specific activity provided by your business.


3. Most importantly, you will not know whether the waiver you are copying is legally sound. There are many waivers that can be found online that are not worth the paper they are written on.


Some online waivers refer to laws that are no longer in force. Others are ineffective because they attempt to exclude more types of loss than permitted by the CAC Act or they do not include an adequate risk warning.


We have seen many waiver forms that may well act as deterrents, but if ever tested in a court of law, would not hold up.


Caution should also be taken if you are considering using free liability waiver templates for the same reasons explained above.


7. What if my customer refuses to sign my waiver?


If a customer takes issue with your waiver, you may refuse to allow them to participate in your activity.


Some businesses will adopt a strict policy around their waiver: no signature = no participation.


Other businesses may not enforce their waiver policy quite as strictly.


It is a matter for each business to conduct a risk assessment of their activity and put in place an appropriate liability waiver policy.


Staff should be trained to ensure compliance with the

policy.



8. My business is insured for public liability. Why should I bother having a waiver?


Although there is no statutory requirement for a business to hold public liability insurance, any business providing recreational services to consumers should have an appropriate public liability insurance policy in place.


A liability waiver is not a suitable substitute for insurance coverage.


The level of cover required will be based on several factors, including the relative risk of injury to participants, and should be determined with the assistance of a reputable insurance broker.