Insurance - Rights to Recourse

[Billett]

Hi,

Im trying to work out whether or not my contract with a supplier included waiving my rights to recourse - I have explicitly asked the question to my suppliers also.

I haven't signed a set of T&Cs but ordering via them is online and has the T&Cs of sale. Would someone be able to assist me in confirming what it's actually telling me?

This is my first one:

15. Limitation or Liability

a. Except as required by law, the Company does not warrant that the Products shall be of any particular quality or fit for any purpose.

b. Subject to these Conditions and except where the Products are sold under a consumer sale (within the Sale of Goods Act 1979), all warranties or terms implied by statute or common law are excluded as far as possible and in particular, but without limitation, the Company shall be under no liability

i) in respect of any defect in the Products arising from any drawing or specification supplied by the Customer;

ii) in respect of any defect caused by the customer and arising from fair wear and tear, wilful damage, negligence, abnormal working Conditions, failure to follow the Company's written instructions (whether oral or written), misuse or alteration of any products without the Company's written approval

iii) under any implied or express warranty Conditions or guarantee if the Products have not be fully paid for by the due date for payment

iv) in respect of Products not manufactured by the Company the Customer shall be entitled to the benefit of any such warranty or guarantee as is given by the supplier/ manufacturer to the Company.

c. Except as expressly provided in the Conditions, the Company shall be under no liability to the Customer unless;

i) written notice of the Customer's claim is received by the Company within fourteen days of the delivery of the Products to the Customer

ii) in respect of all claims arising out of loss or damage to the Products in transit the Customer notifies the carrier and the Company within 7 days of despatch.

d. Where the Customer makes a claim in accordance with paragraph 15c and the Products received are damaged or defective or not of merchantable quality, then a sample of the Products in question shall, at the written request of the Company be returned at the expense of the Customer, to the Company in the condition in which they were received by the Customer. The Company will examine the same and if in the Company's sole discretion, the Company decides that the complaint is justified in whole or part without creating any obligation to do so, the Company may select

i) to replace all or any of the Products

ii) to accept the return of all or any of the Products giving credit to the Customer for the price thereof; or

iii) make an allowance to the Customer of what in the Company's sole discretion it estimates to be the difference in value between the Products delivered and the Contract price.

e. Subject to these Conditions, except in respect of death or personal injuries caused by the Company's negligence, the Company shall not be liable to the Customer for any consequential loss or damage which arises out of or in connection with the sale and supply of the Products or their use or resale by the Customer.

f. Except in respect of damage for which the Company is not legally entitled to exclude liability, the Company's liability for any claim or series of claims shall not exceed the sum for which the Company has reasonably insured.

20. Indemnity

The Customer shall indemnify the Company in respect of all damage, injury or loss occurring to any person or property and against all claims, charges or expenses arising from the condition of the Product or from its use in respect to damage, loss or injury which can be shown to be caused by the carelessness, wholly or partly, of the Customer, or its servants, agents or employees or by any breach of these Conditions by the Customer or its obligations to the Company.

And this is my second one:

Indemnity

The intending purchaser will indemnify the Company in so far as the law permits against any claim which arises from or in connection with the supply of goods whether such liability arises by reason of the Company's negligence or their breach of contract or their breach of statutory duty or howsoever any such liability may arise.

Thanks in advance

 

[Frank the Insurance guy]

And this is my second one:
Indemnity

The intending purchaser will indemnify the Company in so far as the law permits against any claim which arises from or in connection with the supply of goods whether such liability arises by reason of the Company's negligence or their breach of contract or their breach of statutory duty or howsoever any such liability may arise.

Thanks in advance

Although not explicitly waiving your rights of subrogation - the above terms suggest you will indemnify them for any liability claims that arise!

As such it suggests that you cannot sue them in relation to any issues with the product and therefore removes insurers rights of subrogation.

Not sure whether the terms are "legal" and would be considered unfair contractual terms and therefore voided by a court.

Best to seek paid for legal advice for the legal position, but from my view as an Insurance Broker, this is something that would be a Material Fact and therefore need to be disclosed to your Insurers as, in my view, this increases Insurers risk by removing their opportunity to pursue your supplier even where the supplier is negligent!

Best way to look at it - are you prepared to take complete responsibility (liability) for things that your supplier is negligent for? eg. your supplier provides a faulty product that seriously injures your customer. Your customer sues you for the injury. It was not your fault, but under the above terms, you have agreed to indemnify your supplier so will therefore be responsible for paying the injury claim!

 

[Billett]

Thank you Frank. I've reached out to my insurer to see what their take is and i'm not also looking for paid legal advise just to clarify on it. From my insurers prospective they seemed to to not have a basis to really understand whats going on, and maybe I shouldn't have gone to them as they started talking about invalidating my insurance whilst I find out... thankfully they came to the agreement to leave it as is whilst I get clarification.

 

[Billett]

Although not explicitly waiving your rights of subrogation - the above terms suggest you will indemnify them for any liability claims that arise!

As such it suggests that you cannot sue them in relation to any issues with the product and therefore removes insurers rights of subrogation.

Not sure whether the terms are "legal" and would be considered unfair contractual terms and therefore voided by a court.

Best to seek paid for legal advice for the legal position, but from my view as an Insurance Broker, this is something that would be a Material Fact and therefore need to be disclosed to your Insurers as, in my view, this increases Insurers risk by removing their opportunity to pursue your supplier even where the supplier is negligent!

Best way to look at it - are you prepared to take complete responsibility (liability) for things that your supplier is negligent for? eg. your supplier provides a faulty product that seriously injures your customer. Your customer sues you for the injury. It was not your fault, but under the above terms, you have agreed to indemnify your supplier so will therefore be responsible for paying the injury claim!

Dumbing it down a little for me.

From an insurance perspective, in the event of a claim, would the supply chain be followed or would it skip straight to the manufacturer instead of going through the distributer?

 

[Frank the Insurance guy]

Dumbing it down a little for me.

From an insurance perspective, in the event of a claim, would the supply chain be followed or would it skip straight to the manufacturer instead of going through the distributer?

Unfortunately no skipping straight to the manufacturer - it will follow the legal contractual route. eg. Buyer sues who they paid for the item, who then sues their supplier, who then sues the manufacturer.

There are cases where the end consumer makes a claim against the manufacturer directly (usually with big companies such as Apple etc), irrespective of where they bought it from, but legally the manufacturer may not have to deal with it. Even if the manufacturer did deal with a claim directly with the consumer, the manufacturer could come to you for their costs, as in the clause above you have agreed to indemnify them!

 

[Frank the Insurance guy]

Thank you Frank. I've reached out to my insurer to see what their take is and i'm not also looking for paid legal advise just to clarify on it. From my insurers prospective they seemed to to not have a basis to really understand whats going on, and maybe I shouldn't have gone to them as they started talking about invalidating my insurance whilst I find out... thankfully they came to the agreement to leave it as is whilst I get clarification.

Hi @Billett

This is pretty standard. Regardless of whether the policy is formally invalidated or not, if a claim id made against you that relates to this and due to the clause above your Insurer is unable to pass on the liability to your supplier, then they are very likely to decline the claim.

Best to sort it out with the supplier - suggest you advise them that you cannot agree to the clause. They may refuse to trade with you though!

 

[Billett]

Thanks.

Spoke to a Business lawyer today on your advise and reviewed all my 3 contracts. Came away satisfied all is fine and that I meet the requirements of my insurance, the liability for injury etc is set by law and cannot be changed and the main contracts are pretty industry standard.