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Rae Nield: Lining up your truckies

Rae Nield: Lining up your truckies

Lining up your truckies When I was a kid, I always wanted a Tonka Toys dump truck and train set. I wanted a Meccano set too, but had to settle for boring dolls in those unenlightened and pre-Lego days — no wonder I read so many books. But I digress. I thought about Tonka Toys when I was reading a recent New Zealand court case about a real-life dump truck. This dump truck was a bit worn-out and needed some work on its oil pump. The truck owner, who was operating it in a gold mine, had removed the pump and sent it off to an engineering firm for repair. The engineers did some work on the pump and fitted some replacement bushes. The truck owner reinstalled the pump only to have it fail after a short time. As a result, the truck owner faced some pretty hefty costs, not to mention loss of profits. The truck owner claimed $190,000 as compensation for loss resulting from the engineer’s negligent repairs — rather a lot to pay out considering the total invoice price for the job was just under $500. The engineers were surprised, to say the least. They said they had never agreed to fully overhaul the pump, but had only agreed to replace some bushes that were worn, and that was what they had done. Further, there was a clause in their terms of trade that limited their liability for negligence to the invoice price — less than $500. Here's where it all turned to custard: when they first took on the job, the engineers didn't write down details of the truck owner’s service request order. In court, that was crucial because the judge had to look at the invoice (generated after the job was done) to try to decide what work had originally been asked for. Did the truck owner want a full overhaul or just some replacement bushes fitted? On the best evidence available, the court decided that the engineers had agreed to overhaul the pump. The pump had not been overhauled with reasonable care and skill, so the engineers were found to have been negligent. The engineers weren't any more successful in relation to the limitation clause in their terms of trade. The court made clear that any contract clauses that limited or excluded liability would be strictly interpreted according to the wording of the clause. If in doubt, any ambiguity would be decided against the interests of the person hoping to limit or exclude their liability. The terms of trade only limited liability in relation to defects in goods. The problems with the pump were caused by negligent services — the overhaul work. So the engineer’s liability was not limited by the contract clause. Scary, eh! No matter what goods or services you sell, you should always note down details of orders or requests for work in writing. If in doubt about what work you have been asked to do, check it with your customer. And you should also check your terms of trade to make sure any limitation clauses cover all of the goods and services you supply. Hint: Remember to tell your lawyer everything you supply through your business — we're not mind-readers. It's not clear how much the engineers would have had to pay out in the end. All the same, it would be a dump truck-sized sum of money in comparison with the measly $500 Tonka Toy amount they had charged for the job. This article is intended for general information, and should not be relied on as specific legal advice. You should consult a lawyer for advice relating to your own specific legal problems. Rae Nield can be contacted at raenield@marketinglaw.co.nz.


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