A critical analysis of the use of exemption clauses with particular reference to risky activities.

Abstract

Exemption clauses are regarded as part and parcel of most contracts, and are used by suppliers to ensure the efficient running of their business. It is common for suppliers of risky activities to include exemption clauses in their contracts. Therefore, it is submitted that if suppliers of risky activities are not allowed to use exemption clauses, many businesses will close down because they will not be able to afford insurance, and those that do decide to carry on will pass the cost of doing business on to consumers. In determining the enforceability and effectiveness of exemption clauses relating to risky activities, this dissertation will examine the common law position in relation to the treatment of exemption clauses. In terms of the common law of contract, the court will most likely uphold an exemption clause in favour of the principles of freedom of contract and pacta sunt servanda. This is to ensure commercial and legal certainty in contracts entered into between two parties. However, since the introduction of the Constitution of the Republic of South Africa, 1996, the courts will have regard to whether the term or contract is contrary to public policy and the values that underlie our constitutional democracy. This dissertation will further discuss the rights of consumers and the duties of suppliers in terms of the Consumer Protection Act 68 of 2008 (CPA). The CPA has brought about greater regulation of unfair contract terms. It not only prohibits the use of unfair, unreasonable and unjust terms, but also requires a supplier of a risky facility to draw the consumer‟s attention to a term that seeks to limit the supplier‟s liability. Furthermore, the CPA provides for greater protection of consumer rights, and among other things, the CPA aims to ensure fairness in contracts concluded between supplier and consumer.