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Protect yourself and your business against potential liability claims

Article written by Juan Fourie (Head of Santam Hospitality)

South Africa’s tourism sector is finally starting to approach pre-pandemic levels. With the surge in bookings and visitors to your establishment, it is important to ensure that your property and staff follow best practices to be properly indemnified against potential liability claims. Even if there is no negligence on the part of your establishment, from a common law perspective, your business may still have an approach from a third party and your policy could then also be called upon for defence of this litigation.

Disclaimers, (also known as indemnities, exemptions and exclusionary clauses) help mitigate this risk as they are agreements in which one party (the guest) holds harmless another party (the host) from liability that may result from a future event. However, the Consumer Protection Act (CPA) outlines strict regulations around the use and enforceability of indemnity clauses. These need to be clearly drafted in plain unambiguous language and very obviously displayed.

As an owner in the hospitality industry, it is recommended that guests sign a disclaimer. You should still have disclaimer signage present that can be clearly seen upon arrival. Here are some requirements for this signage:

  • The sign should be bright with large bold print and be clearly visible and legible during the day and night.
  • The disclaimer should be located where one would ordinarily expect to find a notice containing the terms governing the contract between the parties involved.
  • The disclaimer should be in a position where it would be unlikely for a reasonable person to overlook it.
  • The disclaimer should not be placed near or next to other notices or busy pictures or adverts.

Staff must do all that could be considered necessary to advise or give notice of the disclaimer to other parties with whom the establishment deals. Disclaimers need to be fair, just and reasonable, and should be drafted by your attorney who has special insight into your unique business activities. It’s important to know that the enforceability of disclaimers cannot be backdated. Once a party is proven to have read a disclaimer, he or she is legally bound by its terms.

What about Section 49?

Section 49 of the CPA identifies certain activities and services that are especially risky and potentially dangerous (with the possible result of injuries or death). In these cases, your patrons must be informed of the ‘fact nature and potential effect’ of the activity and service. The patron must understand the disclaimer and appreciate it, and then should sign against it to show their agreement.

What about insurance and major-loss events?

A well-constructed insurance policy according to your business needs, risk profile, and risk appetite can go a long way to providing you with protection for a major event.

What other precautions should those in hospitality take?

Having a disclaimer does not relinquish you from your duty of care to the public. Other precautions you can take to protect your establishment; your property; and the property of your guests; is with some well-placed surveillance equipment. These should be pointed out to guests and must comply with privacy regulations.

Your whole team, from the front of house to groundskeepers, must be comfortable to handle various situations that occur. Clear procedures on how to handle any issues can noticeably reduce the probability of legal action.

It is critical that your liability insurance carries sufficient limits; all material facts have been disclosed to insurers; and the premiums are up to date. Should an incident arise, you must submit your claim and all supporting information as soon as possible. This will ensure insurers have not been prejudiced and they can actively defend your rights.

Indemnity is not enough

As a hospitality provider, you need to protect your guests and your business from risk. The existence of a disclaimer is insufficient to keep you from third party claims. You are required to comply with the CPA and ensure your guests are aware of any disclaimers and understand these. This is as much for their safety as it is for your own.

Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies.

Santam is a proud National Partner of the NSBC

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