How disclaimers can protect your commission

How disclaimers can protect your commission

6 August 2020

By Cath Dickinson

Does a disclaimer on your marketing materials remove liability for claims of misleading and deceptive conduct being made against you? In what circumstances can a disclaimer effectively relieve you from liability? And when are you simply the messenger of information, rather than the source. Peter Moran, Partner at Colin Biggers & Paisley, explains.

“Be careful,” Peter Moran, Partner at Colin Biggers and Paisley, warned. “Having a written disclaimer on your marketing material is not automatically a ‘get out of jail free’ card. The courts have decided a number of times that the mere presence of a disclaimer is not a complete defence to avoid liability for misleading and deceptive conduct.”

So what can you do to protect yourself? Peter said that disclaimers can certainly be used as a means of limiting your liability, however they must be worded carefully and cautiously.

Limiting your liability with disclaimers

Often, marketing materials aren’t prepared by the agent, but by marketers, copywriters, photographers and floor planners using information obtained from the seller. But just how accurate is that information?

Peter pointed to the leading case of Butcher v Lachlan Elder Realty Pty Limited [2004] HCA 60, where the agent’s marketing brochure included inaccurate information.

“The brochure had been prepared based on information given to the agent by the seller,” Peter said. “That information included a survey diagram indicating the properties boundaries and the buyers relied on this information when purchasing the property. It later transpired that the diagram was inaccurate. They sought the return of their deposit and made a claim against the agent for misleading and deceptive conduct.

“The agent argued that they had simply passed on information about the property given to them by the seller, and relied on a disclaimer on the front and back of the brochure that read: ‘All information contained herein is gathered from sources we deem to be reliable. However, we cannot guarantee its accuracy and interested persons should rely on their own enquiries.’”

The High Court found that the disclaimer was effective to exclude liability for misleading and deceptive conduct.

“They noted that the agent didn’t present himself as ‘possessing research skills or means of independently verifying details’ about the property,” Peter said. “Nor did the agent do anything more than pass on information supplied by the sellers. They didn’t adopt or endorse it. Rather, they acted as a ‘mere conduit’ of the information. The agent had also ‘both expressly and implicitly disclaimed any belief in the truth or falsity of the information’ contained in the brochure.”

One size doesn’t fit all

Since the decision in Butcher, many agents have sought to shield themselves from liability by including a similar disclaimer on their marketing material. But Peter emphasised that such a disclaimer doesn’t always allow an agent to escape liability, as CH Real Estate Pty Ltd v Jainran Pty Ltd [2010] NSWCA 37 illustrates.

“In CH Real Estate, the agent circulated a marketing brochure to potential purchasers with written assertions that the property was a ‘solid investment’ and a ‘great opportunity for long-term security and income’,” Peter said.

“The Court of Appeal found that by including these statements in the brochure, the agent had held themselves out as having specific expertise beyond that of a ‘normal’ commercial agent.

“It was also found that a reasonable purchaser would have understood the information as coming directly from the agent, rather than being information merely passed on from the sellers. By exercising his own professional judgement, the agent was not acting as a ‘mere conduit’ and was liable for misleading and deceptive conduct.”

The case of CH Real Estate shows that each case will revolve around the relevant facts and circumstances, and a disclaimer is just one fact that a court will consider.

“The agent’s conduct as a whole, throughout the entire transaction, will be considered, as will the characteristics of the property, the buyer’s knowledge and sophistication, as well as the nature of the representation or conduct complained about,” Peter said.

Key takeaways

While disclaimers should be included in marketing material, Peter explained that agents should not place too much reliance on their effectiveness.

“For example, a disclaimer will not be effective in cases of intentional deception,” he said. “But even in ordinary cases, agents must still take reasonable care to ensure that what is being represented about the features of a property is true, and that they do not engage in conduct that is misleading. This is particularly the case if the information being represented is easily verifiable.

“Failing to ensure that marketing materials and statements made to potential buyers are accurate invites litigation long after you’ve spent your commission.”

Finally, Peter said it’s essential to always remember the three golden rules of disclaimers.

“First, always include a disclaimer on all marketing materials, whether printed or online. Second, always state the source of the information in the disclaimer. And third, always disclaim all belief in the truth or falsity of the information.”

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