Australian Consumer Law
Under the Australian Consumer Law (“ACL”) suppliers automatically provide consumers with certain statutory guarantees for the goods and services that they purchase.
A supplier is anyone who, in trade or commerce, sells goods or services to a consumer; while a consumer includes a person – or a business – who purchases goods or services costing less than $100,000. In light of this threshold, most of the buying and selling that occurs in your professional life will trigger the ACL’s consumer guarantees.
Amongst the consumer guarantees is a guarantee that services will be rendered with due care and skill. This guarantee – which is comparable to the tort of negligence – has been held to apply in the context of health practitioners.[1]
Importantly, the ACL’s consumer guarantees cannot be excluded, restricted or modified by a contract; it is not possible to simply contract out. This means that if services are rendered without due care and skill, in circumstances where the ACL applies, the result may be liability under the ACL – quite separate from the law of negligence.
Non-delegable duties
A non-delegable duty of care is a duty which cannot be assigned to someone else or another entity. Such a duty cannot be discharged by delegating or transferring liability to another person or company. In other words, a non-delegable duty cannot be contracted out of.
Non-delegable duties would be an article in themselves. But as a pertinent illustration, take a hospital’s duty to provide reasonable care to its patients.[2] A hospital who accepts the obligation and responsibility to treat the patient, also has an obligation or duty to use reasonable care in that treatment. The nature of a non-delegable duty of care is such that the party owing the duty (ie the hospital, in this example) can be liable if a person engaged by them (such as an employee or contractor) fails to perform with due care. The duty cannot be delegated; not even to a properly qualified doctor or surgeon under a formal contract for services.[3]
The non-delegable duty of care has also been applied in other health contexts; for example, medical practices and pathology services.[4]
Contracting Out of Negligence in Commercial Contracts
There might conceivably be instances in the course of your clinical practice and/or the running of your practice where the ACL does not apply and neither does any non-delegable duty of care apply. But these instances will be limited.
Nevertheless, for completeness we will say that should the right circumstances exist, reliance on a contractual clause to negate liability might be a valid strategy.
A clause in a commercial contract which uses clear words[5] to expressly exempt a person from liability in negligence may (in the absence of the ACL and any non delegable duty of care) be given effect as such. This is because a duty of care is likely to be denied where the parties have clearly considered, discussed and negotiated that intent and recorded it in the terms of their contract.[6]
Indemnities
An indemnity is essentially security or protection against loss or injury. It is a means of shifting liability for loss and damage, by transferring liability away from the wrongdoer and onto another party. An indemnity allocates risk but does not actually prevent liability from being incurred in the first place.
An indemnity is the means by which a medical practitioner’s professional indemnity insurance can effectively transfer liability in negligence to another party (namely, the insurer).
In a similar manner, an appropriately worded indemnity clause in a contract is a way that you might be able to shift liability in negligence away from yourself (or someone else may be bale to shift liability onto you). A straightforward one on one doctor-patient relationship is unlikely to lend itself to the giving or receiving of an indemnity. But if, for example, a medical practitioner were contracted to provide services to an organisation (perhaps a hospital, aged care facility or company needing corporate health services) there may exist scope to ask that organisation to release and indemnify the practitioner against any claims arising.
Conclusion
Medical practitioners are clearly obligated to provide due care and skill (ie, reasonable care) in the delivery of medical services. This obligation arises not only under the duty of care at general law, but potentially also the ACL, in contract and/or as matter of professional responsibility. Combined, these multiple sources of obligation make it difficult to contract out of all liability for all failures to exercise due care and skill. This is where an indemnity may be of value.
[1] For example Wickremeratne v Dr Van Der Merwe t/as Balgowah Family Practice [2021] NSWCATAP 161, a case which concerned dental services.
[2] Albrighton v Royal Prince Alfred Hospital [1980] 2 NSWLR 542.
[3] Kondis v State Transport Authority (1984) 154 CLR 672.
[4] See Rooty Hill Medical Centre Pty Limited v Gunther [2002] NSWCA 60 and Chambers v Macquaries Pathology Services (NSWDC, 9 February 2001, unreported).
[5] See Goodman Fielder Consumer Foods Ltd v Cospak International Pty Ltd [2004] NSWSC 704.
[6] Marc Rich & Co AG & Ors v Bishop Rock Marine Co Ltd & Ors [1996] 1 AC 211.
