Am I liable for mis­lead­ing infor­ma­tion sup­plied by some­one else?

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.