Dodo’s doh! doh! liability limitation

How simple can Parliament make it ? In certain cases, a service provider cannot limit its liability in any way. Not at all. Zip. Zero. Zilch.

Yet time and again, CSPs pretend (the polite legal word is ‘purport’) to limit liability when they can’t.

Take Dodo’s current standard contract, for instance …

Dodo’s ‘doh! doh!’ clause

Here’s a copy & paste from Dodo’s consumer contract:

6. Liability

… 6.2  Where it is fair and reasonable to do so, We limit Our liability to re-supplying, repairing or replacing relevant goods or services, or the payment of the cost of re-supplying, repairing or replacing the goods or services.

The legal problem

It’s illegal.

Why it’s illegal

The lawyer who wrote this seems to imagine that section 68A of the Trade Practices Act 1974 is relevant.  Here’s section 68A and we’ll highlight the words that give the lawyer’s idea away:

Limitation of liability for breach of certain conditions or warranties

(1)  Subject to this section, a term of a contract for the supply by a corporation of goods or services other than goods or services of a kind ordinarily acquired for personal, domestic or household use or consumption is not void under section 68 by reason only that the term limits the liability of the corporation for a breach of a condition or warranty … to:

(a)  in the case of goods, any one or more of the following:

(i)  the replacement of the goods or the supply of equivalent goods;

(ii)  the repair of the goods;

(iii)  the payment of the cost of replacing the goods or of acquiring equivalent goods;

(iv)  the payment of the cost of having the goods repaired; or

(b)  in the case of services:

(i)  the supplying of the services again; or

(ii)  the payment of the cost of having the services supplied again.

(2)  Subsection (1) does not apply in relation to a term of a contract if the person to whom the goods or services were supplied establishes that it is not fair or reasonable for the corporation to rely on that term of the contract.

The ‘magic words’ are that a liability limitation ‘a term of a contract for the supply by a corporation of goods or services other than goods or services of a kind ordinarily acquired for personal, domestic or household use or consumption is not void under section 68 by reason only that …’. 

So section 68A has no relevance to ‘goods or services of a kind that are ordinarily acquired for personal, domestic or household use or consumption’.  The limitation of liability it countenances can never apply to such goods or services.  And the exclusion in subsection (2) is by definition irrelevant since the condition to which it serves as an exception cannot occur.

Why can’t it occur ?

Because Dodo’s contract itself proclaims that it only applies to services acquired for ‘personal,  domestic or household use’,  section 68A can never apply. 

The bottom line

Clause 6.2 of Dodo’s standard contract (a) can never apply and (b) is misleading to include in such a contract (because it can never apply) and (c) breaches section 53(g) of the Trade Practices Act if it makes a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy.

When you wish upon a star …

Wishful legal thinking about section 68 abounds.  Dozens of CSPs – including many with lawyers on staff – get it wrong.  So here’s how it works:

If you supply goods or services of a kind ordinarily acquired for personal, domestic or household use or consumption, you cannot limit your liability for a breach of a condition implied by Division 2 of Part V of the Trade Practices Act 1974.  Don’t bother trying.  Can’t be done.  Offence against the Act to tell folks otherwise.