Do 'no reliance' clauses actually protect agents?

Many real estate agents believe that, so long as they do not intentionally mislead buyers and are upfront with disclaimers about information they are providing or representations they are making, the disclaimers protect them. As always, its not that simple.

Overview

Misleading and deceptive conduct has a very broad applicability. Rather than look at particular actions or circumstances, Courts look at the "overall impression" of an agent's conduct. Two examples of scenarios where agents may be liable for misleading and deceptive conduct are:

• communicating information to the buyer the agent believe is true; and
• the agent providing their honest opinions on certain matters when asked by the buyer.

No intent is required to be found guilty. The buyer doesn't even need to actually be mislead or deceived! The only thing that matters is whether, tested objectively, the conduct was misleading or deceptive, or likely to mislead or deceive. 

Scenario

Take the scenario that an agent presents the buyer with a contract and says words to the effect of "I am not a lawyer and cannot give you legal advice. Its also important you be aware that I may be conflicted as I have certain duties I owe to the seller."

If, after saying that, the agent assists the buyer in completing the contract (including advising on the meaning and effect of certain terms), this may be interpreted as providing advice and making representations the buyer may assume they can rely on and leave the agent open to liability.

​So what can you do?

Here are some handy tips to avoid some common pitfalls:

• Before giving an opinion or prediction, be sure the opinion or prediction is based on reasonable, objective grounds. Although it may sound counter-intuitive, giving your opinion based on your experience alone can leave you open to liability;
• Maximise your chance of avoiding liability by providing representations that have not originated from you or been 'adopted by you'. Information 'adopted' by you (i.e. information included in marketing materials) may not be protected even if you believe the information to be true;
• The Courts have suggested that a person who does no more than pass on information and make it clear the information is being passed for what its worth, disclaiming its truth or falsity, may be safe;
• It is generally no defence to say that a consumer should have checked the information or that the consumer failed to make reasonable enquiries; and
• While there is no general duty of disclosure, Courts have stated that the failure to disclose a fact may be regarded as misleading or deceptive, particularly when the consumer was entitled to believe that a relevant matter affecting them would be communicated.

We're here to help

If you find yourself in a situation where the buyer is asking for assistance or advice in relation to the contract, we'd love to help them (and save you potential legal liability).

If you have any doubts regarding any of these issues, get in contact with us.