Do "no refunds" and "at owner's risk" notices protect a business?

The legal position

Incorporation. A clause forms part of the contract only where the party to be bound signed the contractual document, or where reasonable steps were taken to bring the clause to that party's notice before or at the time the contract was made. A notice first seen after the contract has been concluded comes too late, as do terms printed on a receipt issued after payment. The more unusual or onerous the clause, the greater the prominence with which it must be brought to the other party's attention. A clause may also be incorporated through a course of dealing between the parties that is both regular and consistent.

Construction. A clause that has been incorporated must nonetheless clearly cover the loss or event in question. Any ambiguity is resolved against the party relying on it; this is the contra proferentem rule. Clear words are required to exclude liability for negligence. General words may be insufficient, unless negligence is the only basis of liability to which the clause could apply. The rule is applied with particular rigour where the bargaining power of the parties is unequal.

The Unfair Contract Terms Act, Chap. 82:37:

• Negligence (s 5). Liability for death or personal injury resulting from negligence cannot be excluded or restricted. Liability for other loss or damage resulting from negligence may be excluded or restricted only in so far as the term satisfies the requirement of reasonableness.
• Consumer and standard-term contracts (s 6). Where one party deals as a consumer, or on the other party's written standard terms of business, the other party cannot rely on a contract term to exclude or restrict its liability for its own breach of contract. Nor can it rely on a contract term to justify performing the contract in a way substantially different from what was reasonably expected of it, or not performing it at all. In each case, the term is effective only in so far as it satisfies the requirement of reasonableness.
• Sale of goods (s 9). The seller's implied undertakings as to title cannot be excluded. As against a person dealing as a consumer, the implied conditions as to correspondence with description or sample, merchantable quality and fitness for purpose cannot be excluded either.
• Reasonableness (s 13). A term satisfies the requirement of reasonableness if it was a fair and reasonable one to include, having regard to the circumstances which were known to the parties, or ought reasonably to have been known to them, or were in the contemplation of the parties, when the contract was made. In relation to the sale of goods provisions, the court must also consider the guidelines in the Second Schedule to the Act. These include the relative bargaining strength of the parties and whether the customer received an inducement to agree to the term.

A term excluding or restricting liability for misrepresentation is likewise of no effect except in so far as it satisfies the requirement of reasonableness, and the burden of showing that it does rests on the party relying on it (Misrepresentation Act, ss 4 and 5).

Practical implications

"No refunds" notices. Such a notice does not prevent a consumer from rejecting goods that are defective or that do not correspond with their description. It may, however, be effective in respect of goods returned merely because the buyer no longer wants them, since there is no general legal right to return goods that conform to the contract.

"Vehicles parked at owner's risk." A notice of this kind may protect the operator of a car park against certain losses. It cannot protect the operator against liability for personal injury caused by its negligence. Loss or damage to property caused by its negligence is excluded only if the term is reasonable. The notice must also have been displayed so as to be seen before the contract was made, that is, before entry, and not only on the ticket or at the point of exit.

Services involving customers' property. Clauses used by providers of cleaning, repair and courier services that disclaim responsibility for "loss or damage" are construed narrowly. The business must show that the clause clearly extends to the loss that occurred. Where the loss was caused by the business's own negligence, the clause must also satisfy the requirement of reasonableness (s 5(2)), whether or not the customer dealt as a consumer.

Recommended steps

A customer who wishes to challenge such a clause should photograph the notice, ticket or terms, and record when they were first seen. The complaint should be made in writing. Where goods are defective, the customer should rely on the rights conferred by the Sale of Goods Act. See What rights does a buyer have when goods are defective?

A business should present its limitation clauses to customers before the contract is concluded: in the quotation, the order form or the online checkout. It should obtain a signature to any significant terms. Clauses should be specific. Liability should be limited to a reasonable figure, such as the fees paid over the preceding twelve months, rather than excluded altogether. A clause that purports to exclude liability which the law does not permit to be excluded is liable to be found unreasonable.