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IT Companies - Have you reviewed your T&C's recently?

Wed, 30 Nov 2011 09:41:11 +0000

I came across the article below recently from one of our insurers, HCC International, and it provides a good reminder that seeking to rely on limitation of liability clauses in your T&C's can be fraught with danger;

This is a very complex subject. Many people think that if they include in their terms and conditions clauses which purport totally to exclude their liability under the contract in question, they will be safe and that they cannot be sued successfully should they be negligent in the subsequent provision of goods/services or otherwise breach the terms of the contract.

This is not the case. There is a great quantity of caselaw and many statutory and regulatory provisions which impact on this area.

It is not within the scope of this article to analyse each judicial decision and legislative/regulatory provision. The bottom line is that, in simple terms, the chances of a liability limitation or exclusion clause being successful depend largely on whether the clause is "reasonable" when set against all the factors which make up the contractual scenario.

No limitation/exclusion of liability clause is bound to be upheld by a court. It is always a question of reasonableness in the eyes of the court. The court will look at many factors in determining reasonableness.

It is wise to draft a raft of different clauses which address different aspects of potential liability and to make them independent of one another so that if one or more of the clauses is found to be unreasonable, the supplier can still hope to find shelter behind those which pass the reasonableness test.

It is thought best not to merge the provisions together into a single sub-clause but to leave them as separate sub-clauses. The rationale for this is that a court may hold certain elements of a limitation of liability clause to be unreasonable and, if so, it may delete them. If all the provisions are merged into a single clause and the court objects to one element of that clause, the whole clause may become ineffective.

Maximum Liability Clause.

This is included as a long-stop so that if the other clauses which purport to limit or exclude liability fail to stand up in court. It is apparent from several high-profile judgments that if a supplier hopes to be able to rely on a maximum liability cap in a contract, probably the best approach is to tie this into the cap set on the professional indemnity insurance that has been taken out by that supplier.

Hence there is an inextricable link between the interests of software houses (and suppliers more generally), professional indemnity insurers and lawyers. This runs as follows:-

Insurers are far less likely to have to pay out on a claim made by one of their insured supplier clients if that client has dealt on the basis of a properly drafted contract of supply which has limited and excluded liability in a reasonable way and is therefore more likely to be upheld by a court. Thus insurers should carry out due diligence on potential customers to ensure not only that they have terms and conditions in place but also that the terms have been properly drafted and thereby minimise the client's exposure and, consequentially, that of the insurer.
Suppliers are far less likely to be sued if the contract under which they have made the supply in question has been well drafted and addresses different potential areas of liability and appropriately and reasonably imposes limits and exclusions in relation to such potential liability.
Lawyers have a far easier time defending a case when their client's contract of supply contains clauses which have been properly drafted to limit and exclude various aspects of potential liability.

If you would like forther information or would like your insurer to comment on your own T&C's, please contact us.

© This article is copyright Kingsley Napley LLP 2011 and should not be construed as legal advice or opinion in any specific facts or circumstances. The contents are intended for general information purposes only. You are urged to contact a suitably qualified lawyer for specific advice.

Firework Precuations

Wed, 02 Nov 2011 16:02:02 +0000

Anti-social behaviour associated with the firework period has become a major issue for many communities in the UK.

Halloween and bonfire night for example, and the days running up to them, are traditionally some of the busiest nights of the year for the police, the fire brigade and other agencies. The anti-social use of fireworks and the resultant damage which can be caused to property is a serious concern, posing a threat to all types of buildings, including commercial and industrial premises, and to business continuity.

As far as this relates to the business community, the risk posed by fireworks, whether as a result of anti-social behaviour, or merely an accident caused by burning debris, can be significantly reduced by observing the following basic precautions:

Ensure that all areas of the premises are made secure at the end of the working day and doors, windows, skylights and other possible means of entry through which fireworks could be introduced are properly closed and locked.
In all areas where the risk of antisocial behaviour is perceived as high, consideration should be given to protecting letter boxes internally with proprietary metal containers, designed to contain fires from lighted materials such as fireworks. A number of such products are widely available, including those which incorporated an automatic fire extinguisher, offering enhanced protection.
Take particular care to ensure that all yards and open areas surrounding the premises are clear of accumulated rubbish and that waste bins are appropriately located and secured.
Timber pallets, plastic crates and other combustible materials stored in the open should be kept to a minimum and located a suitable distance away from the buildings.
Flammable liquids and gases should be confined to their designated storage facilities.
Vegetation surrounding the buildings is cut back and removed.

Whilst mainly focusing on Halloween and bonfire night, these measures will also apply to other events which attract the use of fireworks such as New Year celebrations and Diwali, and to reducing the risk of malicious fires in general.

Thanks to LV= Insurance for the top tips.

Theft of Lead

Wed, 31 Aug 2011 16:02:01 +0100

The insurance industry has seen a large increase in the theft of lead from buildings over the past couple of years.

Warnings come from insurers that, whilst we are still enjoying relatively good weather conditions, this is the time that the theft of lead is more likely to take place. Community buildings such as village halls and churches are most vulnerable as well as dental and doctors’ surgeries. It is also an ideal opportunity for you to carry out a simple visual inspection of your roofs, which can be done from the ground or from an upstairs window. If your inspection reveals lead has been stolen it is important for repairs to be left to the experts. Without these checks, theft of lead only becomes apparent following a heavy downpour when the resultant water ingress indicates a problem with the roof and subsequent inspection reveals theft. By then the leak can cause further damage.

We ask you to remain vigilant with security and general maintenance at all times but particularly when activity is heightened during the holidays

Technology and Media Contracts

Wed, 31 Aug 2011 14:52:08 +0100

According to one leading insurer, nearly 49% of professional indemnity claims they receive from technology companies arise from a contract breach.

This is often down to poorly worded contracts which can lead to misunderstandings between suppliers and their clients. Smaller businesses can also often feel pressured into signing customers' contracts or terms and conditions without feeling able to challenge or even review specific clauses.

With this in mind Hiscox have worked closely with DLA Piper, to produce a plain language, contracting supplement, entitled “Contracting Hints and Tips.”

The guide:

defines key contracting terms such as “indemnity”, “contract variation” and “warranty”
explains the potential risks associated with components and stages of contracting
offers troubleshooting advice for customers in case of a dispute or breach of contract
spells out the rights and protections contracts offer signatories

Whilst the guide is tailored to the IT and Media industry, many of the tips can be employed by any small business entering into contracts.

If you would like a copy of this guide then please email richard@bensons.co.uk to request.

Building work - be warned!!

Mon, 11 Jul 2011 17:10:00 +0100

A lot of home insurance policies now include a requirement to let them know if you are altering/extending your home and they don’t like it if you don’t. Indeed, your policy might be invalidated if you embark on some project and need to claim...So why the fuss?

Well, experience shows there are more claims for fire; theft; escape of water; weather related incidents and accidental damage, if you have the builders in. Usually, insurers ask to have prior notice of any work exceeding £25,000 and sight of the contract in place. Why - what’s the deal with contracts, more specifically these “JCT’s...”?

A Joint Contracts Tribunal is the contract most builders will use in their relationship with you, offering standard documentation and guidance notes on building works. The reason most insurers want to see a copy of this is that it is possible that the contract might make the contractor, joint policyholder of the home insurance for the duration of the works...So? Meaning that if there’s a claim and the contractor is at fault, the insurer can’t then pursue the contractor for the cost of the damage...starts to make sense, no?

If you are thinking of having work done, contact us for advice on how to proceed with your insurers – don’t leave it until it’s too late!

No claim - still the blame

Wed, 15 Jun 2011 17:12:09 +0100

Yet another incident relating to website insurance problems...

We are presently helping someone who has had their claim refused; their policy cancelled and their insurance premium returned by one online company, following the failure to disclose incidents which didn’t result in claims being made. Just another example of how these companies will adhere strictly to the wordings and yes, they have returned the premium but they have also saved £1800 by not paying the claim. Online solutions will sometimes offer lower premiums but don’t expect any help, support or advice if you need it. Use a broker!

Secret Agent Benson

Mon, 13 Jun 2011 17:13:34 +0100

In my former life I think I was one, or in my future life, I will be..., after having spent too long talking to a Private Investigator at a recent event...

Aside from the usual marital dispute work (very, very busy...), I understand the work being carried out on behalf of insurance companies has never been higher. From observing “disabled” individuals playing tennis, to “watching” organised theft gangs, insurers are investing in catching the fraudsters. The mantra “insurers don’t like paying out” is often unfair – they are there to pay claims but it’s these fraudsters who make everyone else pay and insurers check claims carefully...

De-Bagged!

Thu, 26 May 2011 14:59:01 +0100

So you arrive at your destination, can’t open your suitcase and enlist the help of the friendly hotel manager...

He enlists the help of his “superkeys” which can normally make headway in most situations...the task progresses with the force of a jemmy and then, after the lady explains she must have access to her case and soon, an industrial strength crowbar is engaged, which is more than up to the job. It also makes an impressive mess of the “superlock” and case surround but at least it’s open....ahead of me? Well, it’s not her case....picked up the wrong one at the airport....who is going to pay for that? Answer, it will probably be a claim against the lady individually and she will be able to claim under her personal liability section of her house contents cover....

Ash cloud latest

Wed, 25 May 2011 10:09:48 +0100

Further to our note on Monday, P J Hayman have said they are taking “a pragmatic” approach to helping client with expenditure who are affected by the ash cloud and cannot recover sums elsewhere. Ageas will be covering customers who purchased cover and booked their trip prior to 23 May 2011.

...further updates to follow.

Ash cloud is back!

Mon, 23 May 2011 16:42:24 +0100

We are warned to expect further travel disruption as a result of the eruption of the Grimsvotn volcano...

Hiscox policyholders are either automatically covered (dependent on when the policy was taken out or renewed), or will have their claims considered individually should the airlines/hotels not fulfil their obligations and we will update this position as soon as possible in respect of other insurers.

Travel Angel

Mon, 16 May 2011 13:06:39 +0100

A fantastic and award winning innovation from Chartis, enabling employers and employees to fully research destinations before they travel.

Live tweets help you keep up to date with relevant travel issues worldwide and also helps a business discharge their “duty of care”, to any of their staff travelling on business. A free feature of the Lifeline Plus policy, Travel Angel is a further enhancement to a business travel contract with no age limit; no exclusion for pre-existing medical conditions and full cover for hazardous pursuits....it is also an extremely competitive business expenditure, with 50 trips a year costing from just £380 to cover all employees, with directors and their families benefiting from their private travel too!

Take out 24 hour, 365 days a year cover for Personal Accident in addition and it costs even less! Contact Richard; Peter or Lynda for more information.

Biting your tongue

Sat, 30 Apr 2011 06:02:17 +0100

It Will be a costly claim for Lloyds of London if one Gennaro Pelliccia can no longer taste products for his employers Costa Coffee – his tongue is insured with them for £10m! Take a look at these Top 10 unusual insurance risks....

1. In 2001 The National Sealife centre in Birmingham insured its visitors against death and permanent disability occasioned by the Japanese Giant Crab. The sum insured was £1m.

2. In 2001 a "Captain Beaney" insured himself against abduction, impregnation and consumption by aliens for £1m.

3. In 2002 Paul Hucker insured himself against severe physiological trauma occasioned by England's premature exit from the World Cup. The sum insured was £1m.

4. In 1999 Mary Muphy insured herself against an immaculate conception in the year 2000. Insured amount £1m.

5. In 2002 the Royal Falcon Hotel in Lowestoft insured its staff and customers against death and disability occasioned by poltergeist or other abnormal phenomena. The sum insured was £1m.

6. In 2001 Rich Hall, the comedian, insured himself against a permanent loss of humour. The sum insured was £1m.

7. In 2001 Nicola Jones insured herself against becoming ugly – as determined by 10 independent building workers. Again, the sum insured was £1m.

8. In 2003 Basil Brush insured his tail for £1m.

9. In 1998 James Whale, the broadcaster, insured his tongue for £1m against loss of voice.

10. In 2001 Andrew Areoff insured himself for £500 against receiving "naff Christmas presents". The sum insured was £1m.

A warning to all

Fri, 15 Apr 2011 09:40:21 +0100

A client of mine recently sent his car to Bray Engineering Ltd for repairs to be carried out. They are refusing to release his car having taken payment up front and he is unlikely to see his car again.

We are pursuing an insurance claim for him and are hopeful of getting him a satisfactory outcome but we want to warn anyone out there to check and double check the reputation of the repairers you choose for your car. If in doubt, check with your insurers whether they know them and would recommend them.

Bray Engineering are also known as or connected to Re-Conditioned Engines, Hallmead Services Ltd, The Engine Centre, MPH Engineering Ltd, Engine Warehouse Ltd, Brentsouth Trading Ltd, Heathrow Motor Services Ltd and Rivermead Engineering Ltd.

What risk type are you?

Thu, 07 Apr 2011 09:41:14 +0100

In a new survey lauched by the BBC, and promoted on the excellent Bang Goes The Theory, you can now find out your personal attitude to risk in the Big Risk Survey.

This obviously interests us in insurance who deal with risk and peoples attitude to it on a daily basis. It would be great to get feedback from current clients on how they fared in the test and whether this made them re-consider their thinking around risk.

For the record, it appears I am a recreational risk taker but have a low risk threshold in most other areas! I guess that probably confirms I am in the right job!

Take the test here and post your feedback to our comments.

Thinking of the Cloud?

Thu, 07 Apr 2011 08:08:44 +0100

For any businesses out there who are considering a move to "the Cloud", some thoughts here about managing the risks associated with this.

New M3 anyone?

Fri, 01 Apr 2011 14:24:47 +0100

Anyone wanting a motor quote for the new BMW M3 Royal Edition – (see today’s edition of The Independent page 9) might want to check the email address rather carefully...impressive advert though...!

What's on your toast?

Thu, 24 Mar 2011 15:41:52 +0000

Are you are jam or marmite, or could you perhaps be tempted by marmalade....?

I think many people will be, as this is the name of a new insurance policy we’ll be able to arrange to enable learner drivers, practise in other people’s cars. Charged on a month by month basis, you can pay for the length of time you want them to drive....ideal for young drivers and particularly for children who perhaps are studying away from home and only want to practise out of term time...coming soon.

Theft of oil

Tue, 15 Mar 2011 13:27:08 +0000

For those of our clients who have oil fired heating comes a warning today.

Theft of heating oil from domestic and commercial premises is on the increase as fuel prices rise. One of our partner insurers, Ecclesiastical, have published a guide to minimising your risk of theft and it can be downloaded here.

As ever, if you have any questions on this, contact us today.

Protect Your Plates

Wed, 09 Mar 2011 07:53:33 +0000

We have mentioned the theft of number plates here before.

Sensible advice from Comparenumberplates.co.uk to protect your plates, cherished or not. A simple crime, easily committed but easily avoided.

Countryfile hits Bensons

Mon, 07 Mar 2011 16:14:27 +0000

Well, I am now thinking we need to start a monthly report of our more unusual claims...

February saw a herd of cows wreck a client’s landscaping and now, early March sees Hogwarts come to a village near us, with a client being greeted by an owl perched on the banister and it’s mate, still “negotiating” the chimney... and yes, all resultant damage is covered under the policies involved...

Dare we remind you that you can follow us on Twitter??!!