BC Court of Appeal clarifies requirements for exclusion of liability clauses in unilateral contracts

Unilateral contracts, which set out terms consumers must either “take or leave”, have become ubiquitous.  In particular in the internet age, unilateral contracts have become the electronic norm, with consumers routinely clicking on digital buttons confirming their acceptance of terms and conditions drafted by businesses that the consumer likely did not read or understand.[1] 

In Apps v. Grouse Mountain Resorts Ltd (Apps”)[2] the BC Court of Appeal recently addressed requirements for unilateral contracts to be binding in the more traditional context of signage being used to convey contractual terms.  In its decision, the Court of Appeal clarified that the reasonableness of steps taken by a business to draw clauses such as waivers in unilateral contracts to the attention of consumers will be considered in light of the clause’s potential significance to a customer’s legal rights. The Court also offered some guidance on what may constitute reasonable notice.

Background

The plaintiff was a snowboarder who sustained a catastrophic spinal cord injury after attempting to take a large jump at Grouse Mountain Resort (“Grouse Mountain”). The plaintiff alleged that the jump was negligently designed, constructed, maintained and inspected by Grouse Mountain.

Grouse Mountain brought a summary trial application on the basis of the exclusion of liability waiver which it said constituted a complete defence. The British Columbia Supreme Court agreed and dismissed the plaintiff’s action. The Court of Appeal overturned this decision and allowed the plaintiff to proceed with his claim.

Decision

This case involved the examination of an “own negligence exclusion”, a common type of waiver of liability clause, in the lift ticket agreement at Grouse Mountain. Own negligence exclusions not only exclude liability for the dangers inherent in the use of a business’s product or service, but also liability for negligence caused by the business themselves. The Court considered whether, in light of the onerousness of the own negligence clause, Grouse Mountain had taken reasonable steps to bring it to the plaintiff’s attention.

The Court concluded that not enough had been done to bring the own negligence exclusion to the plaintiff’s attention before he entered into the contract. The exclusion was included in a posted sign above the counter where the lift tickets were sold, but the text was difficult to read, and the own negligence exclusion was not emphasized.[3] Otherwise, the exclusion was only brought to his attention after the ticket was purchased on the back of the lift ticket and on a sign in the terrain park.[4] The Court concluded this post-contractual notice could not be considered.[5]

The Court also clarified that even if the clause was not reasonably brought to the plaintiff’s attention, the exclusion can nevertheless be effective if the plaintiff had actual knowledge of the specific own negligence exclusion at issue. In this case, the plaintiff worked as a ski/snowboard technician at an equipment rental shop at a different mountain where he provided renters with waivers of liability, including an own negligence exclusion. He had also previously signed an agreement including an own negligence exclusion when he bought his season’s pass for a different mountain. However, the Court found that the plaintiff’s previous experience with own negligence exclusions generally did not mean he had actual knowledge of Grouse Mountain’s specific clause, or that he appreciated that such terms were standard and expected in all lift ticket contracts.[6] As a result, Grouse Mountain could not rely on the plaintiff’s previous experiences to find the plaintiff had actual knowledge. 

Key Take-Aways

Onerous terms in unilateral contracts are facing increasing judicial scrutiny due to the inequality of bargaining power inherent to those types of contracts.[7]  This case highlights the importance of carefully considering how signage incorporating these clauses is displayed, and by extension, how these clauses are displayed and brought to the attention of consumers in internet terms and conditions. In particular, this case highlights the importance of emphasizing clauses that have significant impacts on consumers’ legal rights explicitly, clearly, and before consumers enters into agreements.

The Court in Apps offered some guidance about how this might be accomplished.  Specifically, in determining if signage (or by extension online terms and conditions) properly provide notice, a court will consider whether - at the time of contract formation (i.e. when the contract is being signed):

  1. an onerous clause is easy to read, considering the font size and placement within paragraphs;
  2. an onerous clause was specifically highlighted, either through bold or uppercase text or by using colours to draw attention to the clause; and
  3. the consumer would reasonably stop, read and appreciate the significance of the sign or terms and conditions, before or at the time of entering into the agreement. [8]

In light of this decision, businesses would be well advised to review their unilateral contracts to ensure that clauses with significant impacts on consumers’ legal rights are reasonably brought to the attention of consumers before the agreement is binding.    

 

[1] Apps v. Grouse Mountain Resorts Ltd., 2020 BCCA 78 at para. 4.

[2] 2020 BCCA 78.

[3] Apps, at paras. 15, 58.

[4] Apps, at paras. 16-21.

[5] Apps, at para. 58.

[6] Apps, at para. 84.

[7] See, for example, our blog post on Douez v. Facebook, Inc., 2017 SCC 33, available here.

[8] Apps, at para. 59.

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