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
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
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
Businesses should ensure that any promotions do not cross a 'fine line' between acceptable and misleading or deceptive.
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