A fundamental premise within the law is the obligation not to cause harm to other members of society. Therefore in business, you have an obligation not to harm your customers, known as a duty of care. By understanding it, you can be better equipped to understand your responsibilities to customers.
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What is Duty of Care?
A duty of care refers to a legal duty not to cause harm that is foreseeable. Importantly, a duty of care arises because you have in some way contributed to the risk that causes the harm experienced by the other person. Also you must have the obligation to exercise a duty of care for the specific individual.
When is Duty of Care Important?
Duty of care is important because it guides the way you interact with others. The main time you will hear about it is when an individual alleges that the duty has been breached. It is breached when the following criteria are met:
- A person experiences harm because of the action (or occasionally inaction) by another person.
- It was known that the harm encountered would be caused by that individual’s action (or inaction).
- The risk that injury occurring was not minimal and not insignificant
- The action (or inaction) is unreasonable in the circumstances.
Do I Have a Duty of Care Towards My Customers?
As a provider of a good or service, generally you will have a duty of care to your customers. There will be other legal obligations to your customers depending on your industry. Furthermore, if you own or are the occupier of property, you will also have a duty towards individuals on your property. For example, you may be liable to customers who fall in your store, which occurred in Strong v Woolworths Limited. The nature and scope of the duty of care is based on the above mentioned criteria. If you are unsure what duties you owe a customer, get into contact with a lawyer to understand your obligations.
Type of Harm Covered?
It is not just physical harm that you have to keep in mind regarding duty of care. You may have an obligation to prevent your customers from suffering psychological or economic harm.
What Happens if I Breach My Duty of Care?
If you breach your duty towards a customer, your business will be liable for the harm suffered. Therefore, you will have to pay the customer’s damages, such as medical expenses and the loss of their earnings. Furthermore, having public liability insurance can help cover your costs if you breach your duty of care.
Can I Exclude a Duty of Care?
You may be able to exclude your liability for a breach of duty of care through a contract with your customer. You can also exclude the amount of damages you can pay through a breach of a duty you owe to your customer. Keep in mind, that even with a contract, you often will not be able to exclude a duty of care entirely because of public policy reasons. Fundamentally, courts do not want businesses to be able to not compensate individuals for harms that they have caused.
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