Australia: Think about your disclaimer – its a no brainer

Under the Australian Consumer Law, agents may be liable where that information is considered misleading or deceptive. Whilst disclaimers can be an effective shield against liability, they are not failsafe.

In brief

Agents are typically responsible to supply a host of information to purchasers in negotiating sales. Under the Australian Consumer Law, agents may be liable where that information is considered misleading or deceptive. Whilst disclaimers can be an effective shield against liability, they are not failsafe.

What you need to know

  • Agents should take care with the wording, positioning and prominence of the disclaimer;
  • The courts will consider the nature of the transaction and experience of the parties; and
  • Disclaimers may be ineffective at protecting the agent / representor from liability.

Background

Recently in VCAT, the Tribunal observed that the courts may consider a disclaimer ineffective at protecting the representor for misleading and deceptive conduct1. The courts will consider disclaimers as only one of many factors that point to whether or not a person has engaged in misleading and deceptive conduct.

Ultimately the court will consider whether the agent / representor is merely passing on information from one party (i.e. the vendor) to another (i.e. the purchaser), or whether it is reasonable to believe that the representor has endorsed or adopted the information.

The High Court in Butcher v Lachlan Elder Realty Pty Limited (2004) 218 CLR 592 has outlined factors that the court will consider when reviewing the effectiveness of a disclaimer:

  1. The wording, positioning and prominence of the disclaimer – the wording, as well as the prominence of the disclaimer in both its type (i.e. font and size) and the location within the document will be considered;
  2. Length of the document or brochure containing the disclaimer – the length of the document and location of the disclaimer will be considered as lengthier brochures and documents will require further disclaimers in contrast to shorter brochures;
  3. Nature of the transaction – the court will consider the value of the property and whether the agent is aware of most of key characteristics of the purchaser and their key motivations for proceeding with the transaction (and in turn the reliability of that information); and
  4. Nature / experience of the parties involved in the transaction – though this is out of the representor's hands the court will nonetheless consider whether the relying party engaged professional advisors or are well-informed or experienced, intelligent and self-reliant.

Agents should also be cautious of their conduct and the representations (both verbal and written) to the purchaser.

Courts will also consider the proximity of the information relied on. That is, if the purchaser relied on a key piece of information and the information was only slightly incorrect, the court will be more likely to allow the agent to be shielded by their disclaimer. Whereas where the information is severely mistaken, this will be less in favour of the agent producing the brochure.

Conclusion

Ultimately a well-worded and well-placed disclaimer will not protect agents from liability under the Australian Consumer Law. However, should an agent or representative wish to strengthen their protection from liability they should consider investing in legal advice related to their disclaimer and promotional brochures so as to avoid the pitfalls.

Footnote

1Alameddine v Pickles Auctions Pty Limited (ACN 003 417 650) [2018] VCAT 91, [43].

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.

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