Commercial Law: Adelaide Show Ltd v All Business Insurance Pty Ltd and Peter v Amusement Rides Pty Ltd

Running head: COMMERCIAL LAW
COMMERCIAL LAW
Name of the Student
Name of the University
Author Note

1COMMERCIAL LAW
Question 1: Adelaide Show Ltd v All Business Insurance Pty Ltd
Issue
The Adelaide Show Ltd is a company that hosts an annual event in Australia that is
facing issues due to an incident that occurred due to its negligence. All Business Insurance Pty
Ltd is Adelaide Show’s insurer and they had a contract to indemnify the Adelaide Show in case
of such an incident. This however had an exclusion term that stated that the acts described in
Clause 20 (2) of the contract would not be indemnified by the insurer. The issue here is to
determine if the incident was within the scope of Clause 20 (2) of the contract and if the insurer
can reject the claim.
Rule
There are two different categories of terms of contracts these are express terms and
implied terms. Express terms of a contract are those terms which are specifically laid down in the
contract and are clearly defined. Implied terms of contracts are those which are not explicitly
defined in the content of the contract but do form a part of the contract due to the obligations
associated to the same. As laid down in The Moorcock terms of a contract maybe implied in fact
if they are so obvious on the face of it that a man of ordinary prudence would construe it as an
implied term of the contract1.
Insurance contracts in Australia are governed by the provisions of the Insurance
Contracts Act 1984 (Cth). This act at Section 54 deals with exclusion clauses2. Exclusion clauses
are clauses of a contract that limit the liability of a certain party. In case of insurance contracts
1 (1889) 14 PD 64.
2 Section 54 of Insurance Contracts Act 1984 (Cth).

2COMMERCIAL LAW
these limit the liability of the insurer towards the claim of the indemnified party. Section 54
states that an insurer is not entitled to refuse a claim that is otherwise a part of the insurance
policy purely because of an act or omission of the insured person that is not a direct cause or a
contributory element to the loss.
Antico v Heath Fielding Australia Pty Ltd3 held that the reason for the insurer rejecting
indemnity is not important what is relevant is the insured’s act or omission. This means that the
insured’s act or omission must be beyond the scope of the terms of the contract and must be a
direct or contributory cause of the loss. This position has also been reiterated in Maxwell v
Highway Hauliers Pty Ltd4, where drivers were required to pass a driving test before
undertaking their assignments and the company employed them even if they failed to clear such
a test. The court held that not passing the test was not a direct cause of the incident and thus the
insurance company cannot deny responsibility.
Application
Clause 20 of the insurance contract indemnifies the insurer against losses arising from
negligence as act and omissions that cause damage or loss are indemnified. As clarified by the
insurance company clause 20 (2) of the contract (the exclusion clause) applies to acts and
omissions of burglars and trespassers and excludes liability in cases where burglars and
trespassers have caused damage or loss. Thus this express term covered the negligence of the
insurer and his agents.
The insurance company submits that the accident caused by the roller coaster “Mad
House” whose operator did not obtain the safety certificate as required by law would be
3 [1997] HCA 35.
4 [2014] HCA 33.