Indemnities and the 7-Tiers of Protection
The key issue is whether you really need an indemnity and what to do if your indemnity fails/is not upheld in a dispute. Clearly there is always the possibility that the latter may occur and given that very real possibility, what steps should you take?
The indemnity is only one card in your hand of risk identification and management tools. As the saying goes, ‘Life is like a card game: it is not the cards you’ve been dealt, it is how you play them’. So, let’s see which ‘cards’ comprise your ‘risk hand’ and how to manage that.
Please note that these are not in order of importance.
- Common law i.e. setting aside for the moment your T&C and indemnity (form and signage)
- Customer briefing
- Voluntary acceptance of risk (Volenti non fit injuria)
- Managing your risk on the ground/at the coal face
- Terms and conditions (‘T&C’)
- Indemnity: form and signage
The common law is effectively the principles that apply in lieu of a contract arrangement, whether explicit (discussed and signed) or implied/implicit (referred to in your email, booking form, etc.). A well-known and well publicised principle is the ‘duty of care‘, i.e. the degree of care you need to afford your customers to avoid liability in the case of a potential claim. I’ve written extensively on this subject and space does not allow me to elaborate, save to say that indirectly certain aspects will be addressed in this article.
The customer briefing can and should ideally not be limited to what transpires on arrival of your customers. The reason for this observation is that the information conveyed may require preliminary steps by the customer which, if conveyed upon arrival, cannot be carried out. This includes, e.g. malaria (and other) prophylactics, medical check-ups, getting in shape for strenuous activities and more mundane yet crucial issues such as visas. Thus it is not only preferable to carry out this briefing as early as possible in the booking process, but also upon confirmation and upon arrival. It is recommended that this not be done ad lib but that the presenter has a checklist.
Risk can only be accepted if done voluntarily and if the person accepting the risk has been adequately and timeously informed. The customer briefing clearly plays a key role as the supplier endeavours to shift the issue of liability and burden of proof.
The role of the Consumer Protection Act, Act #68 of 2008 (The CPA) is crucial and in this regard the following aspects of specifically Section 49 (‘Notice required …. T&C’) are worth noting if not repeating.
- The reason this clause requires notification to the customer is stated right at the end, i.e. to give the customer an ‘adequate opportunity to receive and comprehend’ the impact of the notice, hence my comments of timing of the customer briefing.
- Timing is specifically addressed, i.e. the notification must be the earliest of the following. When the customer: enters into the transaction; engages in the activity; enters/gains access to the facility; makes payment – thus e.g. no rushed, last minute circulation of an indemnity on a clipboard circulated as a game drive is about to take place.
- The manner in which it must be done is also crucial and this includes ‘plain language’ (as defined in Section 22) and ‘conspicuous’ and ‘likely to attract the attention of an ordinarily alert consumer’ – beware hidden signage, small print, etc. and it is preferable to obtain the customer’s signature rather a simple nod of the head as inter alia a misperception may later be raised (which the supplier is bound to resolve – to be read with section 41). The topics to be addressed include: Limitation/acceptance/assumption of risk/liability.
Anything of an ‘unusual character or nature’ that may be encountered or participated in and which the customer is ‘not reasonably expected to be aware of or notice’, or that may result in ‘serious injury or death’ (adventure tourism here we come!)
Most of the above are aspects to be addressed and managed at the coal face, but what is important is what and how you do it. This includes clear signage upon arrival and in your rooms/tents, briefing upon arrival, care taken with. e.g. slippery surfaces and unfenced pools, staff training, first aid and evacuation.
T&C are often not dealt with properly. Over and above dealing with T&C in the context of Section 49 of the CPA, as illustrated above, here are some of the reasons you need proper T&C which must be accepted by the customer:
- Limitation of liability
- Extraneous but very problematic aspects such as visas
- Applicable law
- Interest on late/non-payments
- Legal fees
- Exclusion of promises, perceptions, advertising, etc.
- Capacity/authority to accept the T&C.
As with some of the topics above, I have written many articles and presented talks on indemnities and signage – again section 49 of the CPA is crucial. The very common observation about indemnities that ‘it is not worth the paper it’s been written on’ definitely is not without merit but that depends on how it has been worded and managed.
Finally, there’s insurance. It is important to note that it is a crucial part of the ‘7 Tiers’ and not mutually exclusive to any of the above and in fact the better you deal with the other 6 issues, the more likely you are to obtain insurance at all, be in a position to negotiate lower premiums and high deductibles thus making the entire risk management per my ‘7 Tiers’ worth your while!
May 11 2020
DISCLAIMER – Each case depends on its own facts & merits – the
above does not constitute advice – independent advice should be
obtained in all instances