Disclaimers: Paper Shield Or Your Best Protection?

The UK Court of Appeal recently considered the liability of issuers to secondary market investors under the Misrepresentation Act 1967 (the "1967 Act") in the case of Taberna Europe CDO II Plc v Selskabet (formerly Roskilde Bank A/S) (In bankruptcy) [2016] EWCA Civ 1262. The Court found that primary and secondary investors could potentially be entitled to rely on online content, such as product presentations, which have been published in a deliberate manner, particularly if the issuer directs investors to the content. However, liability for misrepresentation in these documents could be limited, or even excluded, with an appropriate disclaimer or by limiting third-party access to the materials.

In this case, Taberna alleged that it relied on an investor presentation produced by Roskilde, as issuer, which misrepresented its holdings of non-performing loans. The presentation was available on Roskilde's website and contained a series of disclaimers which sought to restrict or limit liability for any errors or misstatements. The core disagreements focused on the scope of potential liability of Roskilde, as the producers of information under the 1967 Act, and the use of disclaimers to restrict any subsequent liability.

Prior case law such as Peek v Gurney (1873) LR 6 HL 377 already clarified placing material on a website alone does not create a relationship necessary to give rise to liability. In this case, however, the Court found that Roskilde was liable to the secondary investors because it actively encouraged investors to rely on the information in the presentation. Nevertheless, the relationship was mitigated with appropriate disclaimers.

Liability for inducing a party into a contract by a misrepresentation may only be mitigated by an agreement. As there was no formal agreement in this case, the page long disclaimer in the presentation could only act as a notice that the bank would not accept liability for the statements in...

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