Jul 2008

Automatically-generated email disclaimers are used by business organisations all around the world and are now considered standard practice.They purport to deal with a number of business risks and issues, some of which include:

• liability for negligent misstatements;
• liability for the transfer of viruses;
• confidential information;
• messages mistakenly sent to the wrong recipient; and
the "deeming provisions" of the Electronic Transactions Act 2002 (ETA).

Notwithstanding the widespread use of email disclaimers, it is still worth asking the questions: 

(1) Are email disclaimers legally enforceable?

(2) Is there anything else an organisation should do to protect itself from liability or other consequences that may arise as a result of email use?

Can Email Disclaimers Validly Exclude Liability?

There are no specific New Zealand cases upholding the purported effect of an email disclaimer excluding liability, however there is general authority for the proposition that a person may limit or exclude his or her liability for negligence, other than by contract, by giving reasonable notice to the relevant person.  As email is merely another form of communication, there is no reason in principle why an appropriately worded email disclaimer that is sufficiently drawn to the attention of the recipient could not be enforceable.

There are, however, certain practical issues that cast doubt over the effectiveness of email disclaimers.  These include:

• Small Print:  Email disclaimers are typically appended at the bottom of the message in "small print".  This can raise the question as to whether such a disclaimer can be said to be sufficiently drawn to the attention of the recipient so as to be enforceable.  Inserting the disclaimer at the top of the email and/or changing the font to make the disclaimer more noticeable is likely to address this issue, although this needs to be balanced against the potentially negative image that this may portray from a public relations perspective (eg an overly bureaucratic organisation).
  
  
• Timing:  As reasonable notice of a disclaimer needs to be given for the disclaimer to be enforceable, it follows that such person must have had an opportunity to read the disclaimer before the damage or loss was suffered.  This is likely to be difficult to satisfy in the case of an email disclaimer attempting to exclude liability for the transfer of viruses if the virus is transferred at the time the recipient opens the email (ie before the recipient had an opportunity to read the disclaimer).

Even if there are some question marks over the enforceability of such email disclaimers, they can, if used appropriately, be enforceable and they can also have some practical value in being a potential deterrent to claims being brought against the organisation, and be a relevant factor in any dispute or settlement negotiations.

Confidential Information

It is also common for email disclaimers to state that the content of the email is confidential.  In the case of confidential information disclosed to third parties (whether intentionally or unintentionally), a court will more readily impose an obligation of confidence where such information has been conveyed either in a document marked "Confidential" or pursuant to some other communication evidencing a claim to confidentiality.  This is because the recipient is on notice that the information in that email is confidential.  It follows that an express statement that a communication is confidential may well make the difference between information being treated as confidential or not.  Including a confidentiality statement in an email disclaimer may help in this regard. If the email disclaimer appears at the end of the email, consideration should be given to marking important emails as "Confidential" (either in the subject heading or at the very beginning of the email) so that it is immediately clear to the recipient that the email is to be treated as confidential.  As an additional practical precaution, organisations may wish to send particularly sensitive information in an attachment with password protection or in an encrypted form rather than the body of the email.

Emails Sent to the Wrong Recipient

We often see provisions in email disclaimers which instruct or request the recipient to delete and not use, read, distribute or copy the message if it was not intended for that recipient.  These instructions or requests may encourage the recipient, or place the recipient under some sort of moral obligation, to delete the email, although (in the absence of confidentiality obligations) it is unlikely to have any legal force.  If an organisation sends an email in error containing particularly sensitive information, the organisation could seek an urgent court order, either mandating that the recipient delete the email and allow their system to be "scrubbed", or prohibiting them from opening, reading or disseminating the information.  However, considerable damage may have already occurred before an order is granted and obtaining the order may be costly. 

Electronic Transactions Act

The use of email disclaimers could provide some legal value in relation to the "deeming provisions" of the ETA.  Under the ETA, unless the sender and recipient agree otherwise, an email will be deemed to have been received at the time it enters any information system designated by the recipient.  There is a risk that an email will be deemed to have been received even though the message has not reached the addressee's inbox and been read by the addressee.  For example, an email could reach the addressee's server but, due to a technical problem, there could be a delay before it actually appears in the addressee's inbox. 

An email disclaimer stating that if the recipient of the email replies to the email, the recipient agrees that the time of receipt of the reply email will be when the message actually comes to the attention of the addressee could minimise the risk that an email message will be deemed to be received.  However, if in the particular circumstances a higher degree of certainty is required, the parties would be well advised to specifically deal with this issue in a contractual document.

Conclusions

Email disclaimers may provide some value with regard to excluding liability for negligence, protecting confidential information and dealing with the "deeming provisions" of the ETA, although the enforceability of an email disclaimer could be challenged on the basis that it was not sufficiently brought to the attention of the person seeking damages or compensation.  Notwithstanding this, disclaimers which are drafted appropriately and are sufficiently drawn to the attention of the addressee can be enforceable.  Such disclaimers are also relatively inexpensive to develop and use and there are other benefits to having an email disclaimer in place, including:

• being a potential deterrent against possible legal action against the organisation;
• they can be a relevant factor in any dispute or settlement negotiations; and
• they may convey a professional and responsible image.

Organisations should not, however, rely on a standard email disclaimer alone to protect the organisation from liability and other consequences that may arise as a result of email use.  Best practice is to implement and enforce appropriate email practices for the various types of communication the organisation may engage in and a sound IT policy (which would include educating employees accordingly) in conjunction with the appropriate use of an email disclaimer. 

Key Contacts

Karen Ngan +64-9-977 5080 karen.ngan@simpsongrierson.com
Matt Smith +64-9-977 5016 matt.smith@simpsongrierson.com

Note: The information provided in this article is intended to provide general information only.  This information is not intended to constitute expert or professional advice and should not be relied upon as such.  Specialist legal advice should always be sought for your particular circumstances.