As a business owner providing services or engaging a third party to provide services to you, there is the risk that you may be exposed to claims in negligence. The risk increases if you provide services that are more hands-on, for example, horse riding or go karting. It is essential to understand what negligence means, specifically the distinction between negligence and gross negligence, and how this will be helpful for your business.
What is Negligence?
Negligence is when someone fails to do something that a reasonable person would, or would not do and, in the process, causes another person damage, injury or loss. In short, negligence is when someone breaches their duty of care to another.
To determine whether negligence has occurred, you must consider the following factors:
- whether there is a duty of care between one person to another;
- whether there was a breach of this duty of care;
- whether the other person suffered an injury, damage or loss as a result of this breach.
You must satisfy all the above conditions to establish a claim of negligence.
What is the Difference Between Negligence and Gross Negligence?
Negligence is a recognised tort at law. Torts are different types of legal obligations developed by judges to reflect situations where one individual suffers harm due to another individual’s action (excluding criminal behaviour).
Gross negligence on the other hand is currently not a separate tort and is not clearly defined at law.
In short, the concept of gross negligence is more fundamental than a failure to exercise proper care. To compare it with negligence is a question of degree. However, what gross negligence means must ultimately be determined on a case by case basis, and at the determination of a court.
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This guide will help you understand the directors’ duties that apply to you within the Australian corporate law framework.
What Does Negligence Mean for my Business?
As a business owner providing services or engaging a third party to provide services to you, it is important to ensure you draft your contracts appropriately. This extends to limiting your liability through robust clauses. Accordingly, we recommend that negligence should be used instead of gross negligence. By choosing to include gross negligence, this might have an ambiguous effect on your limitation of liability clause.
It is also important to consider having a code of conduct that you present to customers to adequately warn them of risks that they may be exposed to.
Key Takeaways
Overall, it is the Court’s discretion as to whether gross negligence exists. To prove that gross negligence exists as a result of your services will require facing a very high bar. That said, the key is to ensure that you behave reasonably as a business owner. Ensure you uphold your obligations at all times to mitigate incidents from occurring and potential claims. Furthermore, understand what negligence means as a whole. This is also useful to guide and direct your management of the services you provide.
If you need help drafting your contracts, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
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