Website Disclaimers – Yes, They Do Work

Have you ever wondered if your website disclaimers are really necessary? A recent case provides a timely reminder of how a disclaimer can protect you from liability for website mistakes.

It’s customary for websites to include a disclaimer such as: “This information is of a general nature only, and is not advice”. Or “This information is provided ‘as is’, and we accept no liability for its accuracy”.

However, there has not been an authoritative Commonwealth Court decision on their effectiveness until recently. As a result, there has been a degree of uncertainty over basic questions, such as:

Can an incorrect statement on a website result in a claim of negligence against the website owner, and, in what circumstances will a disclaimer protect the website owner from liability?

In July, the UK Court of Appeal reviewed these issues for the first time in the case Patchett v SPATA, setting a precedent likely to be influential in any similar New Zealand case.

Mr and Mrs Patchett decided to install a swimming pool. They searched on Google, and found the website of the Swimming Pool & Allied Trades Association (SPATA) — a UK trade body representing swimming pool installers. On the “about us” page, it stated:

“Installing a swimming pool is a specialised task … One way of guaranteeing that the pool installation company has this expertise, is to make sure they are a member of the SPATA before contacting them for a quotation … SPATA pool installer members are fully vetted before being admitted to membership, with checks on their financial record, their experience in the trade and inspections of their work … Only SPATA registered pool and spa installers belong to SPATASHIELD, SPATA’s unique Bond and Warranty Scheme offering customers peace of mind”.

There was also a function for requesting an “information pack” (which would be sent by post) containing more information about the warranty and member requirements.

The website had a “member finder” function to help visitors find SPATA members near to them. The Patchetts used the function to locate Crown Pools Ltd, who they hired to install their pool. Unfortunately, Crown became insolvent before completing the job and the Patchetts lost their money.

It soon emerged that Crown was not an actual member of SPATA, and therefore had not been financially vetted by SPATA and was not eligible for the warranty scheme, despite the Patchetts having been referred to Crown via SPATA’s website.

The Patchetts attempted to sue SPATA on the basis that statements on its website — which implied that all businesses it listed were members and therefore financially sound and warranted — were negligent.

The Court found that the statements on SPATA’s website were, to some degree, negligent. The website failed to mention that not all businesses listed on it were “full” members that were included in the warranty programme. Therefore, the website was misleading, and capable of making SPATA liable.

However, the Court found that the statement encouraging users to request an information pack meant it was not reasonable for a user to act on the information without making further inquiry (which is to say, by ordering the information pack). In other words, a “reasonable user” would treat the website as only a first step in finding a pool contractor and always request the information pack, which would explain the full story about the membership statuses.

For that reason, the Court found that SPATA was not liable for its negligent statements.

The judgment provides some important findings: it confirms that statements on a website can give rise to a negligence claim; and it confirms that website disclaimers can be effective tools for limiting or excluding liability for website mistakes.

The case reiterates some important messages for website operators:

• Have a disclaimer

Ensure that your website has an appropriately worded and displayed disclaimer. These do not need to be lengthy, complex blocks of text. In the light of this case, the key points to make are:

Instruct users to make their own, independent inquiries before acting on any information; and

State that all information is of a general nature only and must not be taken as advice.

A disclaimer should be considered a first line of defence against claims such as that faced by SPATA (whose misleading statements were entirely accidental).

• Don’t mislead!

Of course, most problems can be avoided altogether by ensuring that your website is not misleading. The problem in this case arose not because of any statement actually being untrue, but because some information was incomplete, and therefore was misleading.

It’s important to note that a disclaimer will be of limited (if any) effect under the Fair Trading Act 1986, where misleading conduct in trade occurs in New Zealand.

• Pay attention to your website

Many websites contain incomplete or outdated information, especially where the website is of a supplemental nature to the business or organisation, and the “primary” information is available offline.

It is also not uncommon for websites to be written and maintained entirely by a third party (for example a web hosting company) or a sole administrator. There are probably many organisations with websites that have never been fully reviewed for accuracy and legal risks by the board or a senior manager.

The SPATA case highlights the importance of ensuring that websites are not misleading and that appropriate disclaimers (that could be included with other important terms and conditions) are in place.

Burgess is a lawyer specialising in IT law at Clendons barristers and solicitors. He can be reached at guy.burgess@clendons.co.nz