A company may incur liabilities where its employees or representatives make inaccurate or misleading statements on behalf of the company/business.
It is important that businesses ensure that all their staff and representatives are aware that any inaccurate or misleading statements made could incur liabilities on the business.
The resulting possibilities are that an inaccurate or misleading statement could be contractually binding on the business depending on the statement it could be seen as an additional term to a contract or seen as a collateral contract in itself. The other possibility is that the inaccurate or misleading statement is seen as a misrepresentation, holding the business as liable. Ultimately the court would decide if the statement made brings liability on the business.
There are a number of ways for the business to restrict such liability:
- Ensure that a well-drafted clause is entered in all staff employment contracts which restricts their authority when making statements to consumers or other third parties.
- Ensure that all staff are given regular training and made aware that any inaccurate or misleading statements made could incur liabilities on the business.
- Ensure that adequate liability insurance is in place. The business should ensure that it is aware of any limitations imposed by the insurer on the cover it offers, and this should information should be encompassed in the staff training.