Assignment Question:
In January 201 5 Sally, a business law student, went to Cartz Rental in Canberra to hire a car to drive to Sydney the same da y. At the time of hiring the car, she asked an employee of Cartz whether she would be liable for any damage to the car if she were to have an accident whilst driving it. The employee replied that she would not be liable for any loss or damage to the car be cause Cartz would “cover it”. He genuinely believed this and had been working at Cartz for only a week at the time. After hearing this, Sally signed the rental form without reading the terms and conditions and took possession of a car. She would not have signed the form if there were a risk that she would be potentially liable for any damage to the vehicle while in her possession.
Whilst stopped at a petrol station on the highway on the way to Sydney, Sally read carefully the document she had signed. She n oticed the following clauses under “Terms and Conditions”, but was unconcerned because of what the employee had told her:
Clause 5: I, the customer, agree to exercise care whilst driving and to pay 100% of any loss or damage caused to the rental vehicle during the term of the rental.
Clause 6: I, the customer, agree Cartz accepts no responsibility or liability for any costs, expenses or damages resulting from any accident or other incident involving the rental vehicle regardless of who is at fault.
On the way back to Canberra fr om Sydney the next day , Sally damaged the car after losing control due to a faulty power steering rack. If Sally had not been using her mobile phone at the time, she probably could have steered the car to a safe stop. Fortunately, she was not hurt.
When Cartz was notified of the damage and the circumstances of the accident , the manager of the business advised Sally that she is liable for 100% of the cost of repairs (totalling $9,000) and that Cartz does not wish to make a claim on its insurance . He referred her to clauses 5 and 6 of the Terms and Conditions , which she signed in Canberra.
Sally seeks your advice about whether she is contractually liable for the cost of repairs to the car.
NOTE: Discuss only contract law principles under the common law (do not discuss torts law, legislation or any consumer protection law such as the Competition and Consumer Act 2010 (Cth)).