Many CIOs do not pay much attention to the terms and conditions on their company’s Web site. However, a recent case in the United Kingdom should serve as a wakeup call to all businesses to carefully consider the terms under which people use their Web sites and reduce the risk of costly litigation.
Patchett v Swimming Pool and Allied Trades Association (SPATA) involved an industry body making representations on its Web site regarding the financial stability of its members. Unfortunately one of its members, Crown Pools, became insolvent during construction for the Patchetts and they decided to bring an action against SPATA in negligence alleging that SPATA had breached its duty of care due towards them in relation to the information it provided on its Web site. The Patchetts argued SPATA was liable for the loss suffered by the Patchetts due to reliance on that information.
Fortunately for SPATA the Web site also included a suggestion that users of the Web site should consider the contents of an additional information pack. The Court held that this operated as a disclaimer against the liability that would otherwise have arisen. Given the increasing number of Web sites that are relied upon by users this case is a serious cause for concern. Any CIOs responsible for a Web site that provides information that may be relied upon should check that it contains an appropriate and up-to-date disclaimer in relation to that information.
The risk in Australia is arguably even greater than that in the UK due to the operation of section 52 of the Trade Practices Act 1974 (Cth) which prohibits conduct in trade or commerce which is misleading or deceptive conduct or likely to mislead or deceive. While it is not possible to disclaim liability in relation to a breach of this requirement, a statement urging independent verification of information and cautioning against reliance may reduce the risk of loss suffered by a user being recoverable.
Although Web site terms and conditions can be helpful from a liability perspective, there are other issues that should also be addressed, including:
- Scope of licence to the user - CIOs should consider the extent to which they are comfortable with users using the content from the Web site e.g. whether or not users can use the data on the Web site for commercial purposes;
- Restrictions on use of the Web site - the permission to use the Web site should be subject to the user not performing undesirable acts in connection with the Web site e.g. uploading viruses to the Web site or overloading the Web site with requests as a denial of service attack;
- Use of user content - users that upload content should be required to grant an express licence permitting the copying and modification of their content and give express warranties and indemnities in relation to use of that content not infringing third party's intellectual property rights;
- Terms of sale - terms and conditions of use of a Web site can be a way of binding the user to particular terms of supply of goods and services available through the Web site.
As far as legal expenses go, Web site terms and conditions are one of the less expensive legal documents a CIO is likely to encounter. While always desirable, well-drafted terms and conditions are particularly useful if you can imagine any situation in which a user of your Web site could rely on the information available on it and suffer loss.
David Downie is a partner in the intellectual property group of law firm McCullough Robertson. For more information please contact him at firstname.lastname@example.org.
IT Advocate is CIO’s series of columns devoted to legal issues and IT.
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