Website terms and conditions. A lesson to be learnt
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2 August 2009
Patchett and Patchett -v-Swimming Pool and Allied Trades
Associates
I am often asked whether or not website terms are really that
necessary. Two schools of thought apply. One is that you are seeking to start a
new business and as such solicitors are required. The second is why waste the
start up costs-cut and paste from a competitor! It is not unsurprising but I
favour the former and never more so now that I have read the recent Appeal case
and the Judgment of Lord Clarke the Master of the Rolls. It concerned a mis-statement
on a website and underlines that not only having the terms but understanding
them is vital. While the website owner was successful at both first instance and
on appeal it would have cost significant monies in getting to that point.
The initial decision held that the defendant 'SPATA' did not owe
the claimants a duty of care in making certain statements on its website. The
Appeal court was asked whether SPATA the trade association for swimming goals
owed the claimants a duty of care. While each decision must be taken in its own
context can such a duty be set out on a website.
In short the Claimants used the SPATA website to choose and
instruct a swimming pool installation company. They paid and were badly let down
by the installer. The installer went into liquidation. The claimant's case
depended upon the contents of SPATA's website. SPATA had a drop down menu which
listed what it does and that "SPATA pool installer members are fully vetted
before being admitted to membership, with checks on their financial record,
their experience in the trade and inspections of their work. They are required
to comply fully with the SPATA construction standards and code of ethics, and
their work is also subject to periodic re-inspections after joining. Only SPATA
registered pool and spa installers belong to SPATASHIELD, SPATA's unique Bond
and Warranty Scheme offering customers peace of mind that their installation
will be completed fully to SPATA Standards" come what may!
In short it was the usual website trade association blurb. But
it was blurb which the Claimants said had led them to spend thousands of pounds
with a trader who was in fact insolvent.
The Master of the Rolls had sympathy with the Claimant "The
claimant's case undoubtedly has some force. The judge however rejected it and I
have reached the conclusion that he was correct to do so. Before I turn to the
essential reasons for the judge's conclusion, I should note the judge's
conclusion..........that there is a difference, which he described as an
important difference, between the statements in fact made on the website and
what Mr Patchett says he understood them to mean. It is an important difference.
The judge was right to say that the question of duty of care depended on the
basis of the statements actually made and the way in which they would be
objectively understood. I agree with the judge that SPATA was not saying that
its members were at all times creditworthy. No warranty was given. SPATA was
saying that before each member joined, checks were carried out on its financial
record and on its experience in the trade and there were inspections of its
work. It was also saying that its work was subject to periodic re-inspections
after joining. It was not saying that Crown would install the claimant's pool in
a sound and competent way; simply that its work had been checked in the past and
had been up to SPATA standards".
and further on "The essential reason which the judge gave for
holding that SPATA did not owe a duty of care to the claimants was that he held
that, while SPATA no doubt knew that the representations on the website would be
likely to be acted upon by people like the claimants, it would not expect them
to do so without further enquiry. The judge held that the third of the criteria
identified by Lord Oliver as arising out of Hedley Byrne v Heller, namely that
it is known, either actually or inferentially, that the representation is likely
to be acted upon by the advisee "without independent inquiry", was not
satisfied. The principal reason it was not satisfied is that, when the website
is read as a whole, it urges independent enquiry.
This is so important when it comes to legal terms. SPATA had the
following namely "SPATA supplies an information pack and members lists which
give details of suitably qualified and approved installers in the customer's
area. The pack includes a Contract Check List which sets out the questions that
the customer should ask a would-be tenderer together with those which must be
asked of the appointed installer before work starts and prior to releasing the
final payment." The Appeal Court said "This makes it clear that SPATA supplies,
not only members lists, which the claimants obtained from the drop down list on
the website, but also an information pack. The purpose of the information pack
was to provide relevant information, including a contract check list which set
out questions which should be asked of a would-be tenderer and an appointed
installer. The judge held that it would be expected that a potential customer
would obtain the information pack. I agree."
SPATA was simply a portal. It was not seeking to hold itself out
as an adviser and advisee as the Court held "I find it difficult to classify
their contact in terms of a relationship, whether special or otherwise. For the
same reason I do not think that there is sufficient proximity between the
parties to give rise to a duty of care".
The Appeal court concluded "In all the circumstances for my part
I do not think that it can fairly be held that SPATA assumed a legal
responsibility to the claimants for the accuracy of the statements in the
website without the further enquiry which the website itself urged. It is common
ground that, if the claimants had asked for and obtained an information pack,
they would have learned the true facts. They would have learned that Crown was
only an affiliate member and that, as such, Crown was not the subject of the
checks referred to and its customers would not have the benefit of the
SPATASHIELD bond or warranty. In these circumstances there was not a sufficient
relationship of proximity between SPATA and the claimants for these purposes and
it would not be fair just and reasonable to hold that SPATA owed them a duty to
take care. Moreover, it is I think of some relevance that it is not suggested
that to hold that SPATA owed a duty of care to the claimants would only be only
a small increment or development from existing case law. It would I think be an
unwarranted extension of that law, even though nothing I have said is intended
to detract from the conclusion that it is important that information put into
the public domain is accurate."
Do special considerations apply to representations on websites?
The answer is no "I do not think that the mere fact that the representations
were contained on a website supports the conclusion that a duty of care is owed.
As ever, all depends on the circumstances. Some websites are interactive and it
may be possible, applying the principles outlined above, to conclude in
particular circumstances that a duty is owed. However, I agree with the judge
that that is not the case here".
So for these reasons I would advise you instructing solicitors.
Not worth the risk.
Michael Coyle is a Solicitor Advocate and can be contacted
via michael.coyle@lawdit.co.uk
About the Author
Lawdit Solicitors offer services and
advice for litigation, commercial contracts, Intellectual Property and IT legal
agreements. We are experts in commercial law with a heavy emphasis on
Intellectual Property, Internet and e-commerce law. Lawdit is a member of the
International Trademark Association, the Solicitors' Association of Higher Court
Advocates and we are the appointed Solicitors to the largest webdesign
association in the world, the United Kingdom Website Designers Association.
