The Nature and Enforceability of Terms and Conditions for Corporate Entities: A Case Study of SafeBoda Uganda

For any lawyer drafting a contract, be it a contract to provide goods or services, they will ensure that the risk in that contract is very limited in relation to their client. They will use various means to try and achieve this, and one of the most common ways include excluding liability for some certain types of loss that may arise from the performance of the obligations under the contract. With the rise of various companies dealing in online transportation services, like Uber, SafeBoda, Bolt and many others, the framers of the terms and conditions of use of these different services have tried so hard to ensure that they alleviate liability on their side as much as possible, to the extent that some of them claim to have no liability at all arising from the relationship between their customers and riders or drivers. Some of the terms and conditions are so airtight that they leave one wondering whether there is actually a possibility of such terms and conditions being legally viable considering that they completely take away liability from these online transportation companies or services. This article will therefore consider the legal standing of such terms and whether it is true that these companies in fact have no liability at all just because riders and customers agree to the terms and conditions. But this cannot be achieved without examining the nature of the relationship between these companies and their drivers or riders. This will be achieved by considering and applying the judgement in the case of Uber BV v. Aslam [2021] UKSC 5. The case study will be SafeBoda, Uganda. 

SafeBoda is one of the various online transportation companies in Uganda, and the business model for SafeBoda and the other online transportation companies is that they develop a phone application, through which a customer is able to search for rider who is near them, and they have this person take them to a particular destination that in most cases they feed into the application. The rider equally has the application is able to see ride requests within the area where they are operating, and when the rider accepts the request for the ride, they pick up the passenger and take them to the initially described destination, and upon arrival, the passenger will either pay using cash or the cashless option, and the amount is determined by the application which calculates the time spent on the road and other modalities. These companies offer other services too such as courier services and delivery services.

In the recent past, SafeBoda updated its terms and conditions for both its riders and passengers/customers, and this caused a clapback from the community because the terms and conditions seem to suggest that the passenger is on their own, and SafeBoda is in no way liable for any injuries, damages and loss that are incidental to using their services. What this means is that if a customer used the SafeBoda phone application to order for food from a restaurant, and the rider after picking the food from the said restaurant decided to eat it or disappeared with the food, that person would not be able to recover from SafeBoda, and they would have to somehow look for the rider. Another scenario could include a person who uses the courier services of the application, if such a parcel gets lost, the person must only seek to recover from the rider and not the company. This seemingly unfair provision of the terms and conditions is also applicable to SafeBoda riders. Under clause 3 of the Terms of Use for the riders, it is made clear that Safeboda will not be liable or responsible for any loss, injury and damage that the rider may encounter as they are working. All these provisions got the public questioning whether the word ‘safe’ should even be retained in the name ‘SafeBoda’. 

In a bid to totally get rid of liability on their side, the company in its terms of use for riders defines riders as independent contractors who are not under a contract of service, but rather a contract for service. The difference between these two is that for a person under a contract of service they are considered to be employees, whereas for one under a contract for service, they are considered to be independent contractors and as such they do not enjoy the rights of an employee and the company is not responsible for their actions. More emphasis is made in clause 3 of these terms where its stated that nothing in the terms or relationship between the rider and the company should be interpreted as giving rise to a contract of employment.

With the above provisions, we are left to question whether indeed SafeBoda riders are merely independent contractors and not employees. The UK Supreme Court decision of Uber BV v. Aslam has been spot on in answering the question as to whether riders and drivers of different online transportation companies are to be considered as employees or just independent workers. This case is specifically important in this conversation because it discusses Uber’s terms of use and the nature of contract that it has with its riders, which are not so different from those of SafeBoda. In that case, a number of Uber employees were demanding benefits that are only available to employees under a contract of employment in the UK. Uber argued that these riders were not employees because the terms of use and the contracts they entered into with the drivers clearly pointed to the fact that they are just independent workers who provide a service, and they only use the uber app as a medium for getting passengers. The court agreed with the drivers and held that the drivers were employees and hence they were to get the benefits employees get, like paid leaves. There are various considerations the court made in arriving at its decision, and these will be discussed used to prove that SafeBoda riders are in fact employees. 

One of those considerations is to be found in paragraph 84 of the decision, where the court while relying on its earlier judgement in the Autoclenz case stated that in determining whether a person is an employee or not, the agreement between the worker and employer will often have to be gleaned from all the circumstances of the case of which the written agreement is only part, and the court went ahead to state that any clause in a contract that seeks to take away the court’s jurisdiction to interpret the contract as one of service would then be inconsequential because it is not the only determination that is used in that aspect. What this means in the SafeBoda context is that the written agreement between the company and the riders plus the terms of use are not the only things to be considered in determining whether the riders are independent workers or employees, but even the way the parties act can be used to make this determination. Further, clauses like 3 of the terms of use of SafeBoda that suggest that the riders are only independent workers would be inconsequential in this argument. 

The court then used 5 ingredients to reach the conclusion that the Uber drivers were employees outside the provisions of their contract like those of SafeBoda that suggest otherwise. These 5 ingredients were; 1. The question on remuneration. The court found that Uber determines the remuneration that is given to the drivers, and all the drivers can do is to work harder and ensure that they got more at the end of the day. This is equally true for SafeBoda which also decides the percentage that they pay out to the riders in case of a cashless payments. 2. The second consideration was the contractual terms on which the drivers carry out their service. Again, the court came to the conclusion that the drivers provided the transportation services on the contractual terms that are determined by Uber as long as they were using the Uber app. This is also applicable for SafeBoda, because there are specific terms as determined by the company under which they can drive the passengers, and they are not allowed to come up with their own terms as an independent contractor may be able to. 3. Another control the court pointed out was that in relation to the passengers that the drivers got. The Uber company through the application has total control over the passengers that are shown to the driver, and his options of passengers are actually limited to those that are being shown to him by the application. But more interestingly, the driver is only allowed to reject 3 orders, and if he rejects more than that, he is cautioned for operating below the required standard. All these controls are equally available for SafeBoda, who also determine the passengers that are shown to the rider and if a rider does not meet a required number of rides, they may be warned or even have their accounts suspended as provided for by clause 14 of the terms of use. 4. The other consideration was given to the control the company (Uber) has over the routes that the driver has to take and also the amount of money they are to be paid by the passenger. This is of course regardless of the fact that the driver is providing the car. The court stated that for an independent driver, they have the right to choose their own routes, and they can ably negotiate the amount of money to be paid by the passenger with no influence at all. For Uber drivers, both those alternatives are not available. The same thing can be said about SafeBoda which dictates the routes that are supposed to be taken by the riders, although they are not usually followed, but the suggestion is still made, and at the end of the trip it is the company that determines how much the rider should be paid. 5. Finally, the fact that Uber regulates the relationship between drivers and passengers was also enough to show the level of control exercised over the driver. For example, the driver is not allowed to call the client after the ride is done, unless they are doing so to return property that is forgotten in the car. SafeBoda too issues riders with a manual that outlines how the rider is supposed to act, what they are allowed to do with the customers and what they aren’t allowed to do.

Conclusively, considering all the above elements, the court reached the decision that not withstanding the contract between the parties that was intended to be a contract for service, there is an effective amount of control that Uber exercises over the drivers, a level of control that can only exist in the context of an employer and employee and not an independent worker. The court further stated that an independent worker has the ability to decide the terms on which they work on which gives them room to improve their economic condition by coming up with innovative ways to better themselves, a luxury that Uber drivers do not have because of the control the company exercises over them. 

As already stated above, the terms that Uber drivers work under are not different from those that SafeBoda drivers work under, and hence all the considerations as to control that the court depended on to reach the decision that the drivers are not independent workers but rather employees are all well applicable in the case of SafeBoda, and hence the control the company has over the riders makes them employees of SafeBoda and not just independent workers as SafeBoda may want to argue. This means that SafeBoda is actually liable to pay and compensate the rider for whatever injury and damage they incur while working for SafeBoda, and this negates the position provided for in the terms of use. 

After arriving at the conclusion that SafeBoda riders are in fact employees of SafeBoda, the next consideration is whether it is indeed true that the company has no liability whatsoever in relation to injuries, loss and damages that arise from the use of the application and service. What happens if a rider does his work in a reckless manner, and the passenger gets physically injured? Do they sue the rider or the company?

In response to the above, the principle of vicarious liability may then be applied. Vicarious liability was defined in the case of Muwonge v. AG [1967] EA 17 as an employer being liable for the actions of their employee. What the principle fronts is that in case an employee does something wrong that causes damage, injury, loss or harm to another person, the person that has suffered the injury as a result of the actions of the employee can sue and recover damages or compensation from the employer. The case of Thunderbolt Technical Services limited v. Apedu Joseph and KK Security (U) Ltd (HCT-00-CC-CS-2009/340) lays down three ingredients that must be proved for vicarious liability to apply, and they are; 1) there must be an employer-employee relationship, 2) the wrong must have been committed by the employee and 3) the wrong must be committed in the course of employment. Hence since it has already been determined that the riders are employees, their actions during the course of work that cause any injury or loss to a customer can be visited on the company. 

The purpose of vicarious liability is so that a person who has suffered loss or injury as a result of an employee’s negligence can be fully and sufficiently compensated, and this is referred to as the ‘deep pocket theory’, which means that the person with the deeper pockets is the one to be sued since they have the capacity to fully meet the damages that may be asked for by the victim. In the instant case, a person who has suffered loss or injury while using SafeBoda stands a higher chance to get compensation from the company which has a lot more money compared to the riders who are paid peanuts in comparison. This is therefore how liability actually extends to SafeBoda for the wrongs committed by their riders.

But even if we decide to take SafeBoda at its best and buy their argument that riders are just independent workers, SafeBoda would still have liability over any loss or injury that is incidental to the use of their services, and this is how. 

SafeBoda considers itself as a company that provides a platform through which transportation services are then provided by independent workers (riders). What this means is that there is a supply chain for the transportation service, and that the parties to this chain are SafeBoda, the rider and the passenger. A supply chain basically means the activities required by an organization to deliver services to a consumer. In our case, SafeBoda would pass as the organization with the service, and it uses the riders as distributors to deliver these services of transportation, deliver and courier to the passengers and customers who are considered as the consumers in the supply chain. This is important because every party in the supply chain has specific obligations to ensure that the chain moves along smoothly. The organization providing the services must ensure that what they are providing is of quality and a particular standard, and this explains the various controls that SafeBoda has on the riders. 

The organization can then not entirely extinguish liability on its end and in any case, if the services that are then delivered to the consumer are defective, then the organization providing the service in the chain should be held accountable and not the distributor as SafeBoda’s terms suggest. The company therefore will be held liable for providing defective services and not being vigilant enough to ensure that the distributors (riders) were delivering quality services. 

The above can also be related to SafeBoda’s Corporate accountability, which is the company showing its stakeholders and customers that is it not just interested in the money they are getting at the end of the day, but also their wellbeing and quality of the services being offered. The terms of use for both riders and passengers do not disclose any ethical investiment on the side of SafeBoda, and they clearly state that both riders and passengers ought to exercise discretion as they use SafeBoda services, showing that as a company they are not really interested in the passenger’s welfare and the quality of services they are providing. This is wrong in the age of corporate accountability and responsibility. Companies must not just look at the financial area of their service, but also the quality of what they are offering. This therefore means that under corporate accountability, the wellbeing of both the riders and the passengers is actually on the SafeBoda company. 

Finally, SafeBoda is a trademark and according to the terms for the riders, no rider has the right to use the SafeBoda equipment like helmets and the jackets without SafeBoda’s permission. And as is widely known, the purpose for a trade mark is to act as an identifier of a service. In this case when people see a rider putting on the SafeBoda attire, they instantly take him or her to be in service of SafeBoda, and there is a quality of service expected of SafeBoda riders, an image that is actually maintained by the riders. Therefore, these riders don’t just provide the riding service, they also advertise the company and give it the credibility that it rides on to get more and more clients, something that the riders do not benefit from, but the company actually benefits from financially. The least therefore the company can do is to provide the riders with protection and compensation in case they get injured or suffer any damage in the course of their work.

Conclusively, SafeBoda and the other many online transportation companies should learn something from the Uber BV v. Aslam case and treat their riders and customers with more dignity and not just consider them as a source of money without providing any sort of care towards them. This therefore calls for a change in most of the terms and conditions of use that are adopted by these online transportation companies.

Whether the Exclusion Clauses in the Safe Boda Terms and Conditions Hold Irrespective of the Status of Riders.

A Contract Law Perspective.

A common way of apportioning risk in a contract is for the parties to exclude or restrict their liability to one another in the event of default. Such exclusions can take a number of forms. Some clauses seek to exclude liability altogether while others put a limit on liability, perhaps by capping the amount payable in damages on a breach, restricting the types of loss recoverable or the remedies available, or better yet, imposing a short time limit for claims. In the case of SafeBoda, the former is the case as the company completely excludes itself from liability of any kind of damages for the use of SafeBoda and completely shuns any responsibility whatsoever for the actions or conduct of its service providers. It also excludes itself from undertaking obligations to intervene in any way in disputes that may arise between drivers, riders or third parties. 

The general principle of freedom of contract must be balanced against public policy concerns, in that a party who freely undertakes a binding contractual obligation should not be equally free to absolve itself from its duty to perform that obligation because then, enforcing performance of contracts would become troublesome. Despite the fact that Terms and Conditions might not necessarily constitute a binding contract, in some instances as on websites, they might become a legally binding contract upon proper acceptance by the user. The question then at arises is whether the Terms and Conditions are enforceable as a contract. Generally speaking, enforceability of a contract would require an offer and acceptance leading to a meeting of minds (consensus ad idem) for valuable consideration between parties (Section 2, Contracts Act, 2010). However, when it comes to Standard Terms and Conditions, what constitutes a meeting of minds as in an ordinary contract as it would be difficult as a meeting of minds would involve a detailed review of each term and condition between the parties to the contract. As such, courts will consider two elements before they can enforce Standard Terms and Conditions, that is: Notice and Incorporation. A contracting party must have prior notice of the terms before the contract is entered into, and the terms must be properly incorporated into the contract itself. In Manasher v NECC Telecom, 2007 US. Dist. (E.D. Mich. 2007), court held that an ambiguous reference to the terms found at the bottom of the second page of the defendant’s invoice was insufficient to put the plaintiff on notice that the terms were to be incorporated into the parties’ contract.

It is important to point out that due to the fact that Standard Terms and Conditions often contain limitation and exclusion clauses that may offer an unfair advantage to one party over the other, it would be unfair for the courts to enforce the terms and conditions without exception, hence the prior notice requirement as opposed to meeting of minds as a result of reviewing each term and condition between parties. Professor G.H.L Fridman(The Law of Contract in Canada, 6th Edition) states that “unless a party has taken reasonable steps to draw the other party’s attention to the contents, or some particular contents, of the proposed contract, the consent of the offeree to the offer will not be taken to extend as far as the terms or term of which the offeree is ignorant. The test is whether the offeree knew the proposed term or terms or had a reasonable means of knowledge of the term or terms as a result of the offeror’s actions.” Regarding the threshold of knowledge of terms and conditions, Justice MacDonell in the Eagle Dancer Case (as quoted by Dentons, December 2nd 2009) found that an experienced businessman familiar with an industry practice of including terms and conditions on the reverse side of quotation forms was bound by those terms and conditions even though he may not have explicitly read them. The implication of this is that courts will accept that notice has been given even if the notice is not explicit.

On the above threshold of notice and incorporation, the SafeBoda Terms and Conditions appear to hold and have enforceability and it matters not, consequently whether the rider is an employee or independent contractor as liability would still be apportioned to him in full. It should however be noted that SafeBoda’s design regarding the Terms and Conditions and functionality of the app is to the effect that no user, current or former, could access the service unless they agreed to the new Terms and Conditions. Freedom of contract would in this instance dictate that a user either takes the terms or leaves them. However, and arguably, SafeBoda because of its low prices in comparison to other similar means of transport attracts a client base who are not only after the safety but the affordability too, such that by restructuring the contract while maintaining the affordability, it leaves the lay man without much choice of choosing between who is liable in case of, say, negligence and affording an unavoidably necessary  as they would definitely go for the transport service with the hope that issues of liability should or might never arise anyway. As this gives an upper hand to SafeBoda, it not only speaks to irresponsible Business Conduct for SafeBoda as a corporate entity but also speaks to duress as envisaged by Section 14 of the Contracts Act (2010).

On another front, Terms and Conditions may constitute an invitation to treat which may in turn result into an offer. Whereas it is true that offers may be accepted to form a contract while such pre contractual presentations may not, they may affect the offer. An example is where the offer is made in response to an invitation to treat, the offer may incorporate the terms of the invitation to treat unless the offer expressly incorporates different terms. If the offer is made by an action without any negotiations, the offer will be presumed to be on the terms of an invitation to treat. (Andrew Burrows, Casebook on Contract (Hart Publishing, 2007)2. This does not differ in circumstances where there is a contract within a contract on similar terms. In light of this, SafeBoda then, as the offeror of the transport service makes an offer to the rider as an employee on terms set out in the terms and conditions. Subsequently, a user makes an offer to the rider bound contractually by SafeBoda Terms and Conditions which the rider accepts. At this instant, another contract is formed which incorporates the Terms and Conditions that govern the bigger contract. 

These positions, as a result of Freedom of Contract, justify a trend where corporate entities providing goods or services ride on the principle of freedom of contract to structure contracts in a manner that absolves them of responsibility and excludes them from liability even where it should fall squarely on them. 

It is perhaps not enough in striking the balance between freedom of contract and public policy concerns to perform obligations in contracts for the enforceability of the Terms to depend on Incorporation of the limitation clauses into the contract and giving notice, for the plain reason that that alone does not remedy the unfair advantage and dominant position one party always has over the other especially financially, which results into exploitation by way of benefiting without incurring liability. This is true more so if one considers that many of these companies (SafeBoda inclusive) require the people for whom they use for the supply of their services (be it employees or independent contractors) to do so using their trademark and hence enjoying the benefits accruing from the use of a trademarksuch as loyalty (Arsenal Football Club Plc v Reed [2003] EWCA Civ 696) which in turn accounts for maximization of profits; many a business entity’s version of having eating their cake and having it too. 

Further, Uganda’s legal and policy framework should pursue a more vigorous approach to striking a balance. First, the words used must clearly and unequivocally cover exactly what they are intended to cover. This was the position in Pegler v Wang (UK) Limited (2000) BLR 218 in which the judge stated that if the defendant had wanted to exclude liability for certain matters then it should have done so expressly. The question for all courts should be whether the clause on its true construction extends to cover the obligation or liability that it seeks to exclude or restrict. For example, if a clause aims to exclude liability for negligence or infringement of data privacy, among others, it is advisable to include an express reference to the negligence. General words such as “any loss”, as is the case for SafeBoda’s Terms and Conditions, may not be sufficient. Although recent cases like the Court of Appeal Decision in Persimmon Homes Ltd V Ove Arup & Partners Ltd [2017] EWCA Civ 373indicate that an express reference is not required, clarity on the issue might be useful in litigation on the scope of the exclusion clause.

Statutory Controls in other Jurisdictions.

Inculcating stringent statutory controls into the legal framework through legislation may be useful. An example is the United Kingdom which enacted the Consumer Rights Act 2015. The Act covers all aspects of unfair terms in business-to-consumer contracts. It deals with implied terms in relation to the quality of goods and services, including digital content, and regulates attempts on the part of the trader to exclude its liability for breach. The Act also introduces a “fairness” test in that any term which causes a “significant imbalance” in the parties’ respective positions, to the detriment of the consumer and in a way which is contrary to the requirement of good faith will be regarded as fair. A term that is “unfair” is not binding on the consumer, and the consumer can treat it as struck out of the contract. In this case, the remainder of the contract will stand if it is capable of doing so according to the usual principles of severability.

The Unfair Contract Terms Act (UNCTA) 1977 allows for restriction of liability in case of other loss or damage that’s not death or personal injury resulting from negligence, for example financial loss or property damage, but only in so far as the term or notice satisfies the reasonableness test. A term will be reasonable if it a “fair and reasonable one to be included having regard to circumstances which were, or ought to reasonably to have been, known to or in the contemplation of the parties when the contract was made (s. 11(1)). The five guidelines to interpreting “reasonableness” laid down in Schedule 2 include; the relative strengths of the parties’ bargaining positions, whether the customer received any inducement to accept the term, whether the customer received any inducement to accept the term, whether the customer knew or should have known that the term was induced, in the case of a term excluding liability if a condition is not complied with, the likelihood of compliance with that condition at the time the contract was made and whether the goods were made or adopted to the special order of the customer.

Conclusively, the Ugandan legal framework and Courts of Law should review the position in reflection of the recent Uber decision and clearly and expressly pronounce themselves on the status of workers in the gig economy and stipulate clear rules governing the formulation and enforceability of Terms and Conditions and their subsequent effect on contracts in order to strike the balance between freedom of contract and the public policy concerns which require fulfilment of the duty of the parties to fulfil their obligations.