By Sanette Viljoen
With regard to the validity of an indemnity clause or an indemnity form, the best-known court case must be that of Afrox Healthcare Ltd v Strydom (172/2001) ZASCA 73.
In this case the hospital’s indemnity form indemnified it against the negligence by the hospital and/or its personnel. In this case the court held that the form signed by a person when he was admitted to a hospital was valid. The hospital therefore successfully averted a claim for damages.
It is important that service providers take note that the legal force of the various cases in this regard dealt with in South Africa was to a great extent affected by the Consumers Act (Consumers Protection Act (Act 68 of 2008)). Certain orders were to some extent weakened by the consumer legislation. In the future there will definitely in relevant cases be less favourable judgments for providers of these types of service.
One should therefore not rely on the Afrox Healthcare appeal court case. Look at the current consumer’s legislation and at how it will change your position.
It is clear that the Consumers Protection Act is an effort to extend protection to consumers, also with regard to the so-called “indemnity” or “indemnity clauses”.
This legislation stipulates that a provider cannot require or compel a consumer to waive any of his rights. Neither may a service provider require a consumer to accept any obligation and to exempt one of the providers from any of its liabilities in a way that is unfair, unreasonable or unjust.
In other words, the law says that I cannot exempt the hospital from liability if it is unfair, unreasonable or unjust. Such waiver of my rights in terms of the Act may then also not be a precondition for the provider to enter into a contract with me. The hospital may not, for instance, refuse to admit you on such grounds.
It is therefore clear that it is the intention of the Act to ensure that providers do not try to avoid or evade their reasonable obligations by means of unfair terms and conditions and an agreement, for instance an indemnity clause. The same principle also applies with regard to the reasonable quality of services provided.
Applying the aforesaid to the Afrox Healthcare case: I am of the opinion that had the Consumers Act been in force at the time, the hospital would not have been able to exclude its liabilities so easily and that the patient would not so easily have waived his rights. The question would then have been: did the waiver take place and was the inclusion of the clause in the indemnity form fair, reasonable and just?
What is fair, reasonable and just?
The law says that if a contract contains a term or condition such as an indemnity clause, such clause will be unfair, unreasonable and unjust if:
– it is excessively biased toward the provider;
– the terms of the transaction or agreement are so unfair towards the consumer that it can be regarded as unfair;
– the provider made misleading or false representations that the consumer trusted to his detriment; and
– the transaction was subject to unfair, unjust or unreasonable terms and conditions that were not brought to the attention of the consumer in the correct way.
An important and cogent provision of the Consumers Act is that the contract must be written in uncomplicated and easily understandable language. There is little doubt that an important clause such as an indemnity clause should also be pertinently brought to the attention of a consumer before he signs such a document.
It must be borne in mind that the major part of the Consumers Act only took effect on 1 April 2011 and did not apply in many cases. The provisions of the Act therefore apply to forms signed after 1 April 2011.
The Act does not specifically stipulate that indemnity clauses will in future be illegal or invalid. The question is whether they are reasonable, fair and just? Are they understandable and were they properly brought to my attention, etc?