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Landmark ruling means it's time to review your website disclaimers

EDITORIAL: In the first case of its kind, the Court of Appeal has endorsed website disclaimers. Mistakes can be excused by warning notices, it ruled. However, the judges based their decision, at least in part, on a misunderstanding of how people use websites.

The case confirms that a website can owe a duty of care to its visitors. That much was predictable, albeit untested (by my recollection) in UK courts. What was less predictable was how easily a site could dodge that duty: simply tell your visitors to seek further information before they rely on what they read and, hey presto, you're off the hook. This month’s ruling is a gift for the risk-averse. Cue more disclaimers on websites.

You can read our report of the ruling but here's the short version. The dispute involved a couple, the Patchetts, who wanted a swimming pool for their garden. They visited the website of a pool installers' trade body, SPATA. That site listed a company called Crown as being a member. The site described the safeguards for customers who hire SPATA members. There was a mistake, though. Crown was only an affiliate member of SPATA and the safeguards described on the site applied to full members only. Crown became insolvent and the Patchetts sued SPATA to recover a loss of £44,000.

SPATA escaped liability because its 'about us' page contained a statement that urged potential customers to obtain an information pack before hiring a swimming pool installer. That was, in effect, SPATA's disclaimer. Lord Anthony Clarke and Lord Justice Scott Baker concluded that SPATA owed no duty of care to the Patchetts, largely because of that disclaimer.

The court reviewed a landmark ruling from 1964 (the case of Hedley Byrne v Heller) which described a test for detecting a duty of care between advisor and advisee. That case said that a duty of care does not exist unless it is known or can be inferred that a statement is likely to be acted upon by the advisee "without independent inquiry". SPATA was saved by its recommendation that website visitors request an information pack.

It's a very rare thing that a website mistake like SPATA's will trigger a lawsuit in the UK. But this case highlights the risk of inaccuracies and the value of disclaimers in a way that we haven't seen before. It's the first case to test website disclaimers, even if it does so indirectly.

There are three things that strike me as odd in the judgment.

Firstly, Lord Clarke said that web users examine all pages of a website. A witness for SPATA said, according to the ruling, "that it was intended the website would be taken as a whole, 'not a bit here and a bit there' and that more information would be obtained from SPATA."

A judge in the High Court, hearing the case last year, accepted that SPATA "could reasonably expect potential customers to have regard to all the information potentially available from the website and not just part of it," according to Lord Clarke. He added: "I do not think that the judge erred in any way in reaching that conclusion."

I disagree. I think both the judge and Lord Clarke erred. I suspect neither judge has ever had reason to do website traffic analysis, but website visitors rarely examine more than a few pages of a site. Disclaimer pages and 'about us' pages are seldom among a site's top destinations.

Secondly, Lord Clarke implied that "interactive" sites are more likely to owe a duty of care to users. Frustratingly, we're left to guess what sort of interactivity he's talking about. Does he mean sites that let users ask questions and receive answers on the site? Does he mean sites that provide information only to registered users? Or sites presenting a contract that must be accepted with a click and possibly payment? Or does he mean something else? We're simply not told.

The ruling also found that there was no duty of care because there was no proximity. But if the Patchetts had requested an information pack, there would be proximity, it seems. If that information pack made the same error as the site, perhaps there would be a breach of a duty of care, by Lord Clarke's reasoning. So liability turns on a visitor's failure to heed the recommendation.

SPATA claimed that its members are backed by insurance and Crown was identified as a member. Given that information, I think it's incorrect to suggest that most users would investigate further (a point that Lady Justice Smith made in her dissenting judgment). I think there was sufficient proximity between advisor and advisee to establish a duty of care and a breach of that duty. That is my third criticism of the decision.

It may have been fatal to his claim that Mr Patchett admitted reading the disclaimer. Mr Patchett acknowledged that it was remiss of him not to make the inquiries recommended. That admission explains why Lord Clarke never heard arguments about traffic analysis and why he came to the erroneous conclusion that people read every page.

Had this reasoning been explored fully, though, surely we would have heard about the basic principles of disclaimers and exemption clauses. In 1971, Lord Denning punished a car park's failure to alert drivers to a condition, concealed in its small print, that said cars are parked at the owner's risk. He famously observed that, to give sufficient notice, the condition "would need to be printed in red ink with a red hand pointing to it, or something equally startling."

The SPATA case does not overrule Lord Denning. So if you agree with me that people don't read every page on a site, and you agree that the ruling bolsters the effectiveness of generic disclaimers, and you want to avoid liability for mistakes on your website, it follows that you should have a disclaimer and that you should make an effort to bring it to your users' attention.

Disclaimers are unpleasant creatures, almost by definition. They also have a nasty habit of undermining a user's confidence in what they're reading. Alas, we'll likely see them more often.

I'd recommend that organisations review the likelihood that their visitors will find and read their disclaimers. It's a brave operator that assumes they'll never make a mistake on their site or that, if they do, they'll be sued by an honest individual like Mr Patchett who owns up to reading and ignoring the warnings. If generic disclaimers can work, as the court has suggested here, your risk manager surely will want you to maximise their exposure.

So watch out, champions of clean design and user experience: ugly warnings are coming soon to a site near you.

How we'll change our approach to disclaimers on OUT-LAW.COM

In the early days of the web, law firms, banks, insurers and other risk-averse businesses were afraid of publishing online. On some sites, before you could read anything at all, you had to click your acceptance of a wicked, wordy disclaimer that said, in effect, "You've only got yourself to blame if you rely on what you read here. It could be nonsense, so always seek independent advice."

When setting up OUT-LAW.COM in 2000, we knew that if we wrote an article that contained an error of law, and someone relied upon that article and lost money as a consequence, we might get sued.

We examined our potential defences to such a claim. For example, this is general guidance for the public, not advice given in the course of a lawyer-client relationship, so there is unlikely to be a duty of care; and perhaps common sense tells you that you should always consult with a solicitor. Another potential defence was our disclaimer, accessible via a link at the top of every page on our site.

Our disclaimer begins: "These pages contain general information only. Nothing in these pages constitutes legal advice. You should consult a suitably qualified lawyer on any specific legal problem or matter." It goes on to say that we make no warranties about the content of our own site or of sites to which we link. It's standard stuff.

Some law sites still put that on every page of their guidance. We don't. We took the view that such generic disclaimers carry little weight so we put ours at a one-click distance from all other content. We figured it might work. Our lack of confidence in the likely impact of such disclaimers was the main reason that we didn't clutter every page with the full wording or even a summary.

We thought other factors would be more influential in determining the existence or otherwise of a duty of care. We also knew that if we did get sued for making a mistake, our defences might fail. A court could infer a duty of care, owed by us to our visitors (even if they're not existing clients of Pinsent Masons). So we concluded that we must work hard to avoid getting the law wrong.

We have a policy that says we will only publish material if we are confident that it is accurate, general in nature and unlikely to provoke complaints. News stories and other legal guidance must not appear on our site without being checked by a qualified solicitor. When content is perceived to be high risk – a good example being stories about defamation proceedings, where litigants tend to get twitchy about all coverage of their cases – we double-check the content at a senior level. We also have an insurance policy, in case the worst happens.

The Court of Appeal has forced us to rethink our approach. If we can mitigate our risk further, we should, even if that interferes with the user experience. Our insurers will rightly expect that of us. Organisations with a greater appetite for risk might reasonably decide to do nothing to their sites.

These are just my views, of course. Don't take my word for it. After all, this page contains general information only. Nothing here constitutes legal advice and you should always consult a suitably-qualified lawyer.

By Struan Robertson, editor of OUT-LAW.COM. The views expressed are the author's own and do not necessarily represent the views of Pinsent Masons . You can follow Struan on Twitter: twitter.com/struan99.

UPDATE, 04/08/2009: Take a look below and you'll see our new disclaimer. You'll find the same thing at every other page of this site that carries legal guidance. We hope you don't find it too ugly.

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