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24 August 2015 Am I liable for misleading information supplied by someone else?

By Harry Snow, Partner and Adam Zwi, Graduate at Law


In Brief

The Australian Consumer Law prohibits misleading or deceptive conduct and false or misleading representations. But can you escape liability if you merely pass on misleading information provided by someone else?


The conduit principle

Generally, an intermediary that innocently passes on misinformation may not be held liable for misleading or deceptive conduct. If the circumstances make it apparent that a corporation is not the source of the information, and that it expressly or impliedly disclaims any belief in the truth or falsity of the information, the corporation does not itself engage in misleading or deceptive conduct.

The High Court has held that a company has not made a misrepresentation if it innocently carries false information in circumstances where it is, and is seen to be, a mere conduit.

The key issue is whether the intermediary has 'adopted' the misrepresentation. There are a number of factors which are relevant to this question.

  • Whether there is a disclaimer. A disclaimer can put an ordinary reasonable reader on notice that the intermediary has not endorsed or adopted the misrepresentation
  • Whether the seller holds itself out as having the means to independently verify the accuracy of the information
  • Whether the circumstances as a whole suggest that the intermediary is an innocent carrier of the information
  • Whether the source of the information is identified. In a 1988 Federal Court case, a wholesaler who failed to attribute the authorship of a misleading label to the manufacturer was held to have 'adopted' the text, and was therefore liable
What does this mean for businesses which pass on information?

If you or your business disseminate information that others have provided, there is always a risk that the information could be incorrect or misleading. Therefore, it is important to be aware of how you can minimise your liability.

In some circumstances, it is appropriate to publish a disclaimer which states that you cannot guarantee the truth of the information provided to you.

In other circumstances, it may be necessary to identify the source of the information.

Other effective strategies include independently verifying the accuracy of the information yourself (if you have the means to do so), and encouraging your customers to conduct their own enquiries.

Lastly, it is always advisable to seek legal advice when drafting disclaimers, terms, conditions and user agreements. These instruments set the parameters of your legal relationship with your customers – so it is important to get them right. We can advise you on the appropriate wording to use in a variety of commercial situations.
 
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This article is not legal advice and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.

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