British Columbia Court Finds Disclaimer for Online Brokerage System Unenforceable

Recently, a British Columbia Provincial Court ruled against Merrill Lynch HSBC ("MLH") in a dispute involving the use of its online brokerage system called NetTrader. The Claimant, Wei Zhu, had sought to cancel a sale of shares, which had been transacted online and for which, Zhu claimed to have received confirmation of the cancellation. In fact, the cancellation of the sale had not been completed resulting in duplicate trades of the same shares. MLH argued that the confirmation received was subject to prior fills and as such, the cancellation had not in fact been confirmed. MLH sought to rely on legal disclaimers displayed on the site and in a document contained in the user agreement to support the argument that cancellation requests were subject to prior fills. The Court found that there was no evidence that either disclaimer was ever provided and that the disclaimers were enforceable. Further, given the high risk of loss of a customer's investment monies, the Court held that the nature of MLH's services demanded a higher duty of care and performance than ordinarily expected in the provision of services. In the Court's view, these standards were not met. For a copy of the decision, visit: http://www.provincialcourt.bc.ca/judgments/pc/2002/05/p02%5F0535.htm