Australia: Watch your step – balancing exemption clauses

Legal Directions – June 2011
Last Updated: 21 June 2011
Article by Liam Casey


The respondent, Mrs Young, decided to go to Europe for a holiday with her husband. In February 2005, she bought a European tour package from the appellant, Insight Vacations Pty Limited. In October 2005, Mrs Young and her husband joined the tour in London. While travelling by coach from Prague to Budapest, Mrs Young got out of her seat to retrieve something from a bag she had stowed in the overhead compartment. The coach braked suddenly, and Mrs Young fell backwards, suffering injury.

Mrs Young's claim was first heard in the District Court of NSW before Rolfe DCJ. Mrs Young succeeded in her claim and judgment was entered in her favour for $22,371 plus costs. Insight successfully appealed to the NSW Court of Appeal as to the quantum of damages awarded, but by majority, the appeal against liability was dismissed. By special leave, Insight appealed to the High Court.

Mrs Young alleged that by virtue of section 74(1) of the Trade Practices Act 1974 (Cth) ('the TPA'), there was an implied term of her contract with Insight that the services supplied would be rendered with due care and skill, that Insight had failed to do so, and as a result she suffered injury.

In response, Insight relied upon an exemption clause within the contract with Mrs Young which denied liability for any instance of death or personal injury where safety belt was not being worn at the time of such accident or incident. Insight alleged that it could rely on the exemption clause because firstly, its supply of the service of transportation by coach was the supply of a 'recreation service' within the meaning of section 5N of the Civil Law Liability Act 2002 (NSW) ('the Civil Liability Act') and secondly, section 5N was picked up and applied as a surrogate federal law, by operation of section 74(2A) of the TPA. The exemption clause could then be given effect.

The issues

The High Court had to consider the following issues:

  •  Did section 74(1) of the TPA apply?

Section 74(1) provides that in every contract for supply by corporation of services, there is an implied warranty that services will be rendered with due care and skill

  • Did section 74(2A) of the TPA operate, and if so, how?

Section 74(2A) provides that where implied warranty was breached and the law of NSW was the proper law of contract, state law applied to limit or preclude liability for breach of implied warranty in the same way as a breach for another term of the contract

  • If 'yes' to the above, is section 5N of the Civil Liability Act a law which meets the description given in section 74(2A) of the TPA and thus applied?

Section 5N provides that the term of contract for supply of recreation services may exclude, restrict or modify liability for a breach of implied warranty

  • If section 5N does meet the description given in Section 74(2A), does it apply to a contract for the supply of recreation services, where the supply occurs outside of NSW?
  • If section 5N of the Civil Liability Act is engaged, and if in consequence Insight may rely on its exemption clause, does that clause operate, on its proper construction, as an answer to Mrs Young's claim?


  The High Court dismissed the appeal with costs for the following reasons:

  •  Section 74(2A) of the TPA did not pick up section 5N of the Civil Liability Act, as the section did not, in itself, provide any exclusion, restriction or modification of liability. It merely permitted parties to contract for the exclusion, restriction or modification of liability
  • Even if section 5N of the Civil Liability Act had been picked up and applied by section 74(2A) of the TPA, it would not have been applicable to the facts and circumstances of this matter. The High Court noted that section 5N applied only to contracts for the supply of recreation services in NSW. Insight's contract with Mrs Young was to supply recreation services to her outside of NSW
  •  The exemption clause, on its true construction, did not apply to the events that transpired. The exemption clause should be construed as engaged only when a passenger was seated, and as having no application when the passenger was standing or moving about in the coach.


The High Court's ruling raises some interesting discussion points relating to the relationship between the Civil Liability Act and the TPA. The High Court considered the Civil Liability Act's construction when forming their

judgment. Having regard to the earlier sections of the Act, the High Court noted that the Act made no express provision for any extra territorial operation. Therefore, the High Court considered section 5N, as it was drafted, was subject to geographical limitations when read in terms of the Act's statutory context.

Further, section 74(2A) of the TPA should not be construed as picking up and applying section 5N of the Civil Liability Act as a surrogate federal law provision, as it was not a law of the kind described in section74(2A).

The High Court's interpretation of the exemption clause was also notable. The first part of the exemption clause read 'where the passenger occupies a motor coach seat fitted with a safety belt' (emphasis added).

The first part of the clause was given its ordinary meaning, being that it applied when the passenger was seated. The contract did not require passengers to remain seated at all times while the coach was in motion, as there

were often circumstances when that would occur. The High Court considered that if the exemption clause had omitted the word 'seat', it might have been possible to say that the clause applied to any occasion when the passenger was aboard a coach fitted with seatbelts. However, this was not how the clause was written, such that it did not apply.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.