Article contributed by Joanna R. Cohen, Ellenoff Grossman & Schole LLP
Third-party food delivery services such as Grubhub, Doordash, and Caviar are a boon to consumers and restaurants alike. Among other benefits, restaurants can increase order volume and exposure while consumers enjoy greater variety and convenience.
These advantages are evidenced by the fact that online food orders currently exceed those placed by telephone. However, inherent risks associated with restaurants, such as foodborne illness, as well as issues that may arise from deliveries, such as accidents and physical injuries, raise the question: who’s responsible when something goes wrong?
In their service contracts with restaurants, many third-party food delivery services attempt to limit their own liability for any issues concerning the food itself and any accidents and injuries that occur during the delivery process. If and when enforced, such provisions can potentially leave the restaurant solely liable, should certain events arise. While restaurants often have limited bargaining power when entering into agreements with such delivery services, there are steps restaurants can take to protect themselves against liability.
The first step a restaurant may take is shopping the standard third-party service agreements for the various delivery services. Hiring experienced counsel to participate in this process is advisable. Indeed, terms and conditions of third-party delivery service agreements vary. For example, Grubhub’s standard merchant agreement provides that the restaurant is responsible for indemnifying Grubhub for any claims, while Doordash provides a mutual indemnification clause, which includes indemnification over claims “of bodily injury (including death) or damage to tangible or real property to the extent caused by the Indemnifying Party’s personnel (or . . . the Merchant Products).” Caviar provides that the restaurant is responsible for indemnifying Caviar and explicitly provides that “the Restaurant will be fully responsible for any and all injuries, illnesses, damages, claims, liabilities and costs.”
Once a restaurant has narrowed its preferred food delivery services, the next step is to understand its rights and responsibilities under such delivery services’ agreement. A restaurant may attempt to negotiate with the delivery service. Among other issues, restaurants should consider trying to negotiate for some or all of the following:
- Requiring proof that a delivery service have insurance covering the service itself as well as any delivery personnel;
- Requiring that the restaurant be listed as an additional insured;
- Requiring background checks of delivery personnel;
- Requiring that the relationship between the restaurant and delivery service and any delivery personnel is clearly defined;
- Requiring indemnification;
- Requiring that the delivery service complies with industry standards with respect to food handling (including, but not limited to, temperature maintenance).
Similarly, food delivery services should be cognizant of similar issues and consider addressing foodborne illness concerns, among others, to the extent it is not addressed in their standard agreements.
Restaurants and delivery services should also specifically address the issue of who bears the cost of customer order errors. While many delivery services disclaim responsibility for any order errors in their standard agreements, some services contain more specific provisions. For example, Doordash provides that in the event of a refund or re-order, the restaurant is responsible for preparing the food under the specifications of the original order and “bear the full cost of that refund or re-order, unless the refund or re-order is due to the gross negligence or willful misconduct of [couriers or drivers] or Doordash.”
Aside from third-party delivery service agreements, restaurants must consider delivery services that offer delivery of their food absent an agreement, or even the knowledge of the restaurant. Such services can pose additional concerns for restaurants. Indeed, a delivery service operating without an agreement creates a greater potential for unforeseeable and certainly undefined liability for the restaurant.
Aside from contractual issues, restaurants can also take advantage of technology in order to attempt to shield against liability. Among other things, tracking technology may assist in foodborne illness disputes.
It is advisable for restaurants and third-party food delivery services to consult with experienced counsel and consider their rights, responsibilities, and potential exposure before entering into such agreements. While restaurant-delivery service arrangements offer many potential benefits, it is critical to be cognizant of potential liabilities and plan accordingly.
Disclaimer: This article only reflects the personal opinion of its author. The opinions and views contained in this article shall in no way reflect the opinions and views of Ellenoff Grossman & Schole LLP or any other persons or entities. Nothing contained in this article shall be construed as legal advice and should not be relied on in any manner. This article may be considered Attorney Advertising.
Joanna R. Cohen is an associate in the Litigation Group at Ellenoff Grossman & Schole LLP. Her experience includes representation of clients in litigation in federal and state courts. Ms. Cohen also worked as an Assistant Attorney General for the State of New York defending the State in litigation in federal and state courts. Ms. Cohen can be reached at (212) 370-1300 or jcohen@egsllp.com.
