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ACCC forces Uber Eats to change its liability exclusion clauses

 

For more than 150 years, Courts have upheld the right of a carrier to exclude liability for loss and damage to goods provided that the exclusion clause is ‘just and reasonable’.

As Justice Blackburn said in Peek v The North Staffordshire Railway Company [1863] EngR 1016:

a condition exempting the carriers wholly from liability for the neglect or default of their servants is prima facie unreasonable [unless the carrier] holds forth as an inducement a reduction of the price below that which would be reasonable remuneration for carrying at owner's risk

These days, the test is that the exclusion clause must not be ‘unfair’ – see section 23 of the Australian Consumer Law which provides that a term is void if it is unfair.

Since November 2016, the Australian Competition and Consumer Commission (ACCC) has enforced section 23 to protect small businesses against unfair contract terms contained in standard form business-to-business contracts. A ‘small business’ employs less than 20 people.

In its Report on Unfair Contract Terms in Small Business (November 2016) the ACCC stated:

The ACCC identified numerous indemnity clauses that raised potential concerns, the most common being terms that … limited the liability of the larger business … in relation to any loss or damage arising as a result of the business relationship (page 14)

ACCC forces Uber Eats to change two unfair clauses for restaurant food deliveries

The ACCC media release (17 July 2019) explains:

From at least 2016, Uber Eats’ contract terms made restaurants responsible for the delivery of meal orders, in circumstances where they had no control over that delivery process once the food left their restaurant.

Uber Eats’ contract terms give it the right to refund consumers and deduct that amount from the restaurant even when the problem with the meal may not have been the fault of the restaurant.

“Following our investigation, Uber Eats has committed to changing its contract terms that we believe are unfair, because they make restaurants responsible and financially liable for elements outside of their control,” ACCC Chair Rod Sims said.

“We consider these terms to be unfair because they appear to cause a significant imbalance between restaurants and Uber Eats; the terms were not reasonably necessary to protect Uber Eats and could cause detriment to restaurants.”

Uber Eats has agreed to amend these terms, to clarify that restaurants will only be responsible for matters within their control such as incorrect food items or incorrect and missing orders.

Under the amended contracts, restaurants will also be able to dispute responsibility for any refunds to customers and Uber Eats will reasonably consider these disputes.

In addition to these contract terms, the ACCC was also investigating whether a contract clause which referred to Uber Eats not providing logistics services was misleading. The ACCC was concerned by these terms given Uber Eats’ role in determining the pool of drivers available to restaurants, their payments, and providing facilities such as the consumer’s address, map services and GPS tracking to assist the driver in delivering meals. Uber Eats also agreed to remedy this clause.

“We welcome Uber Eats agreeing to remove the statement in its contracts saying it does not provide logistics services, because clearly, in our view they do,” Mr Sims said.

Analysis: The unfair Uber Eats terms and conditions

Uber Eats (Uber B.V. a Netherlands company) provides its services to restaurants under its standard Uber B.V. Terms and Conditions, which apply world-wide (except in the USA or Mainland China).

Uber Eats describes itself as a ‘technology platform’ which enables Uber Eats app users ‘to schedule transportation and/or logistics services’ with ‘independent providers’. This description echoes Facebook’s former description of itself as a neutral platform not responsible for what people post and share on their services.

The Uber Eats Terms and Conditions operate in two ways to exclude liability:

  1. By requiring the restaurant to acknowledge that:
    UBER DOES NOT PROVIDE TRANSPORTATION OR LOGISTICS SERVICES OR FUNCTION AS A TRANSPORTATION CARRIER AND THAT ALL SUCH TRANSPORTATION OR LOGISTICS SERVICES ARE PROVIDED BY INDEPENDENT THIRD PARTY CONTRACTORS WHO ARE NOT EMPLOYED BY UBER OR ANY OF ITS AFFILIATES
     
  2. And by requiring the restaurant to agree that:
    THE ENTIRE RISK ARISING OUT OF YOUR USE OF THE SERVICES, AND ANY SERVICE OR GOOD REQUESTED IN CONNECTION THEREWITH, REMAINS SOLELY WITH YOU, TO THE MAXIMUM EXTENT PERMITTED UNDER APPLICABLE LAW
    .
    Note: The words are capitalised in the original

What the ACCC has achieved is to shift some of the responsibility to provide refunds to dissatisfied customers from the restaurant onto Uber Eats, by having Uber Eats change these terms so as to acknowledge:

  1. that it provides transport and logistic services; and
  2. that it accepts responsibility if the food it delivers is spoilt or lost whilst in its control.

As a result, if Uber Eats drivers deliver hot food to customers cold or vice versa, or fails to deliver at all, it is Uber Eats and not the restaurant which is liable to refund the cost of the food, if the food is within the control of Uber Eats at the time it was spoilt or lost.

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