How a Code of Conduct Can Help Avoid Liability in Negligence

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Table of Contents

• What is a Code of Conduct?
• Duty of Care
• Breaching Your Duty
• Exceptions to Negligence
• Suggested Strategies to Avoid Liability
• Key Takeaways

If you run or are thinking about running a business whose services pose a risk of injury to customers, you may be exposed to claims in negligence. For example, if you run a rock climbing service or offer horse riding lessons, customers may be harmed. Therefore, it is essential to know how to best protect yourself from claims in negligence to avoid potential disputes. An effective way to decrease your liability and the risk of injury is to provide customers with a code of conduct. This article will explain negligence and the strategies you can take to minimise liability, including making use of a code of conduct.

What is a Code of Conduct?

A code of conduct is a document that sets out the standards and reasonable expectations of those you provide services to. If your customers enter into an agreement with you, they should also agree to abide by the behaviour outlined in the code of conduct.

The code of conduct might set out potential risks associated with the activity and ways your customers can respond to and avoid that risk.

Duty of Care

A duty of care is an obligation to take reasonable care of those in your:

• supervision;
• care; or
• control.

This duty arises because you have assumed supervision, care or control of your customers. Therefore, you have assumed responsibility for their safety in circumstances where they rely on you. Your customers may also reasonably expect you to take responsibility for them and their well-being.

Breaching Your Duty

In a claim of negligence, the plaintiff (the person making the claim) must prove a breach of the duty of care. A breach occurs if you have failed to do what a reasonable person would have done to reduce the risk of harm in the circumstances.

For example, a reasonable person would check that their customer’s safety gear is worn correctly. If you do not check the safety gear, you would have breached the standard of care.

You can breach your duty of care by acts and omissions, including failing to adequately advise or warn. If an oversight is not reasonable, the court will look for a direct connection between your behaviour and the customer’s harm.

To summarise, you might be liable for negligence if:

1. harm occurs to your customer;
2. that harm was reasonably foreseeable in the circumstances; and
3. the harm suffered by the person would not have happened without your negligence.

Exceptions to Negligence

Many of the defences available to a service provider for negligent conduct revolve around the warnings provided.

For example, a customer might be aware of a risk and choose to expose themselves to that risk anyway. In this case, the customer cannot then recover money for the injury that occurs.

You may successfully defend a claim of negligence if you can demonstrate that your customer:

1. was fully aware of the risk;
2. fully comprehended the nature and seriousness of the risk; and
3. voluntarily chose to undertake the risk.

Similarly, this defence is available for customers partaking in recreational activities. If a person who is under your care engages in a recreational activity, being an activity for enjoyment, relaxation or leisure, and you give a warning about the risks posed by that activity, then you may not be liable.

Overall, giving customers warnings of the potential risks involved is helpful in defending against claims of negligence.

Suggested Strategies to Avoid Liability

It is important you adequately warn customers of risks and how to avoid them in any service you offer. This is particularly crucial if the service you provide is highly associated with risk of injury, such as a travelling tour or a surf camp.

A detailed code of conduct explaining all foreseeable risks the activity carries would be effective at reducing your liability.

You should refer customers to your code of conduct and have them agree to it in the initial contract. If you make your customers aware of the risks before signing any agreement, they can proceed with the activity. When this happens, the customer takes on the risks and you will not be responsible for the harm they suffer.

Key Takeaways

When you offer a service that carries risks, it is essential you take steps to protect yourself from liability. Developing a code of conduct can be an effective way to lower your liability. It allows you to warn customers of your service’s risks and asks them to agree to avoid such risks. It is evidence that your customers had knowledge of the risks and that they chose to engage your services regardless.  

If you need assistance drafting a code of conduct, get in touch with LegalVision’s contract lawyers on 1300 544 755 or fill out the form on this page.