Ethio telecom: Limited Liability or No Liability?

June 29 , 2019
By Binnyam A. Idris ( He holds LLM and MBA degrees. He is a lecturer and researcher in law and business at St. Mary’s University. )

The legal profession must contemplate a mechanism to make sure Ethio telecom or any other service provider is bound by the words of its contract as understood to serve the interest of justice, argues Binnyam A. Idris who holds LLM and MBA degrees. He is a lecturer and researcher in law and business at St. Mary’s University.

This is an article that questions the validity of certain agreements, even when one is said to provide his or her free and full consent to the contract. The issue discussed pertains and can be replicated with similar entities, but I will limit the scope of this article to one institution, Ethio telecom.

Ethio telecom is the sole service provider in Ethiopia for telecommunication and internet-related services with a total customer base of more than 41 million. Any person or firm that plans to carry out business and needs the various services it provides is required to sign a contract (customer acquisition form) prepared by Ethio telecom.

This form serves as a contract between Ethio telecom and the customer. Under the standard rules of contract, the relation between the parties is governed by the terms and conditions set in the form.

Ethiopia’s internet blockage was one of the major news stories of the past two weeks. The failure of the service provider to give prior warnings or explanations after the incident has left all to contemplate the reasons. However, no advice or apology was forthcoming from the company. A simple message or a clear explanation would have been acceptable for most of the population.

However, even that would not be enough for some businesses who have incurred significant losses as a result of the interruptions. I was faced with such a case when I was called to the office of a particular business person who wants to sue Ethio telecom for damages sustained by his business. As a result, I had to go through the contracts he has with the company.

Contracts are the centrepiece of every conceivable business transaction. They determine the respective obligation of parties engaged in a particular business to establish the expectations of involved parties. In case a dispute arises while operating, these terms and conditions will enable the courts to settle the difference with certainty.

The universally accepted principle of freedom of contract dictates parties must determine the subject matter of the deal of their own free will. Yet once they have spelled out their desires into a contract, they are expected to respect and abide themselves by each term, hence terms of contracts are called laws for the parties because of their binding nature.

This being the trend, exceptionally, there are contracts that embed terms and conditions so sophisticated or industry-specific that a party who wants the service has no option other than endorsing the terms whether it befits his or her personal interest or not. Even under such contracts, due care is taken not to overburden the party with no option but endorsing the terms to be eligible for securing product or service.

One of the terms and conditions Ethio telecom lists are instances where the company shall not be liable under any circumstances. One of these is the interruption of business as a result of the loss of service for whatever reason. This same article states Ethio telecom shall not be liable for any indirect, special, incidental/consequential damages of any kind including loss of profit, even if Ethio telecom has been advised of the possibility of the damages. A look at these provisions reveal the level of liability Ethio telecom wants to admit under service failure for all sorts of reasons - you guessed it, no liability.

In a situation where the customer does not have a say in the negotiation process of term development, it is in the interest of justice and fairness as well as principles of a contract, to ensure the terms of the agreement do not harm the customer’s interest. Just because one party has the monopoly of a particular, service its entitlement to be free from any liability under all circumstances does not sound right.

Legally speaking, a redress for lost service and consequent business loss is also a possibility. This argument must first base itself on the distinction of exclusion of liability from the limitation of liability. A limitation of liability clause is a contract provision limiting the amount of exposure a firm faces in the event of a legal dispute.

Exclusion of liability must be differentiated from limitation of liability. The terms and conditions mentioned above, which are used as a legal basis to silence any contractual claim against Ethio telecom by clients, fall in the exclusion of liability category.

Limitation of liability is the wrong nomenclature. The concept of limitation is vastly used in sectors of business provisions whose total cost for redressing fault, if any, may end up in crippling the business itself and affect its very existence. We find similar concepts of limitation of liability in the maritime industry and the aviation sector. Yet even in these cases, the circumstances which entitle a party to payment of damages is in place when the fault of the service provider is the reason for sustained damages.

A statement to the same effect goes like this, “We will not be liable to pay more than x birr for such and such case." Translating the same to Ethio telecom is not only fair but within the accepted standards of law that govern limitation of liability.

Certain legal systems make it a duty of the service provider to warrant the quality and other conditions of service even when the provider has not explicitly warranted the same. This is what we call a legal warranty.

The application of contractual warranty is also excluded by the terms and conditions of Ethio telecom, because it is stated that Ethio telecom makes no warranties of any kind whatsoever expressed or implied for the use of the service. It seems the company has equated itself with the former imperial sovereigns who claim they are above the law and cannot be sued by anyone.

The Ethiopian civil code recognizes and has provisions that deal with unconscionable contracts. The discussion of the civil code is relevant here as the construction, validity and interpretation of the terms and conditions of the Ethio telecom service contract are expected to be governed by the laws of Ethiopia.

It is not a rule to invalidate a contract or certain of its terms on the sole ground of complaining its terms are more favourable to one party. It is an exception to do so when justice requires it. An extended interpretation of this provision could be used in a court of law to challenge some of the liability exclusion provisions as unconscionable by arguing the consent of the client was secured by taking advantage of his need.

The absence of competing service providers has forced everyone to consent to the one-sided terms and conditions. Had the case been different and several other companies were providing the service, there would be a high likelihood that the terms and conditions would vary. Moreover, to a great extent, the profit motive would motivate companies to incorporate the client’s interest. This of course would have given freedom from want advantage to customers, enabling all to say no to such draconian terms.

Until such a time comes, the legal profession must contemplate the mechanism to make sure Ethio telecom or any other service provider is bound by the words of its contract as understood to serve the interest of justice. Speaking on the issue and challenging the validity of the unfair terms and conditions will foster businesses by enabling the service provider to be more conscious of the interests of its clients.

Only in scenarios of full transparency should public policy be a justification for acts that relieve the actor from liability. We must make sure that policies that are meant to serve the public do not end up harming the public.

PUBLISHED ON Jun 29,2019 [ VOL 20 , NO 1000]

He holds LLM and MBA degrees. He is a lecturer and researcher in law and business at St. Mary’s University.

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