Principles of Business Law 2024 PDF

Principles of Business Law Semester 2 2024 TOPIC 9: CONSUMER LAW MISLEADING AND DECEPTIVE CONDUCT Misleading or deceptive conduct: The prohibition Section 18 "A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive." Section...

Principles of Business Law Semester 2 2024 TOPIC 9: CONSUMER LAW MISLEADING AND DECEPTIVE CONDUCT Misleading or deceptive conduct: The prohibition Section 18 "A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive." Section 18: Person Section 2C(1) of the Acts Interpretation Act 1901 (Cth): In any Act, expressions used to denote persons generally (such as "person", "party", "someone", "anyone", "no-one", "one", "another" and "whoever"), include a body politic or corporate as well as an individual. Section 18: In trade or commerce  Misleading conduct is prohibited only if it takes place ‘in trade or commerce’.  In Concrete Constructions (NSW) Pty Ltd v Nelson, the High Court interpreted the phrase ‘in trade or commerce’. In trade or commerce: Concrete Constructions v Nelson FPBCL p 338-9 Facts  N was employed by CC. He was injured when he fell down an air-conditioning shaft on one of CC’s construction sites.  N fell because a foreman (CC’s agent) told N a grate at the entrance to the shaft was secure, but it was not.  N sought damages for breach of what is now s 18 of the ACL.  CC argued that the foreman’s conduct, whilst misleading, did not breach the prohibition against misleading and deceptive conduct as it did not occur ‘in trade or commerce’. In trade or commerce: Concrete Constructions v Nelson (ctd) Issue  Did the making of the misleading statement by the foreman take place ‘in trade or commerce’? Decision  Internal communications between employees (not related to customers) do not to occur ‘in trade or commerce’. Reason  The phrase ‘in trade or commerce’ refers only to conduct which, of its nature, bears a trading or commercial character (not all conduct engaged in by or on behalf of a business). Section 18: Conduct that is misleading or deceptive Conduct is misleading when it leads the persons to whom it is directed into error.  McWilliam’s Wines v McDonald's System of Australia  ACCC v TPG Internet  ACCC v Coles Supermarkets Conduct that is misleading or deceptive McWilliams Wines v McDonald’s FPBCL p 389 Facts  McW Wines advertised cask wine it produced under the name ‘Big Mac’.  McD (the fast-food chain) claimed that consumers, familiar with its infamous Big Mac burger, would be misled into thinking that the wine was a McD product or otherwise affiliated with McD. Issue  Was McW’s use of the words ‘Big Mac’ misleading or deceptive? Conduct that is misleading or deceptive: McWilliams Wines v McDonald’s (ctd) Decision  The conduct was not misleading or deceptive. Reason  Wine and fast food are quite different products.  In Australia, McD does not serve alcohol.  The reasonable consumer would appreciate there is no connection between the McW’s product and the McD corporation. Conduct that is misleading or deceptive: ACCC v TPG FPBCL p 310-11 Facts  In a series of radio, television and newspaper advertisements TPG:  (very prominently) promoted a very cheap unlimited data internet plan; and  (far less prominently) disclosed that the cheap plan was only available to those who bundled their home phone line with TPG.  The ACCC brought proceedings alleging that the advertising was misleading. Issue  Was the advertising misleading? Conduct that is misleading or deceptive: ACCC v TPG (ctd) Decision  The advertising was misleading. Reason  ‘Fine print’ cannot qualify or contradict the ‘dominant message’.  It did not matter that any mistaken belief on the part of the consumer would be corrected before any transaction resulted. Conduct that is misleading or deceptive: ACCC v Coles Supermarkets FPBCL p 308-9 Facts  Coles sold bread products partially baked elsewhere and then snap frozen, with the baking process completed by Coles in store.  Signs placed in Coles’ in-store bakeries included phrases such as ‘baked today, sold today’ and ‘freshly baked’.  The ACCC alleged that such statements represented that the products had been entirely baked that day in store and were thus misleading. Issue  Were the signs misleading? Conduct that is misleading or deceptive: ACCC v Coles Supermarkets (ctd) Decision  The signs were misleading. Reason  Would consumers even notice the signs?  Yes, consumers are likely to be concerned about the freshness of baked goods, and thus pay attention to the signs.  If noticed, how would the signs be interpreted?  The statements on the signs (falsely) suggest the entire baking process took place in the Coles in- store bakery. Conduct that is misleading or deceptive: Disclaimers There will be no breach of s 18 if a disclaimer qualifies information that would otherwise be misleading.  Butcher v Lachlan Elder Realty Pty Ltd Conduct that is misleading or deceptive: Disclaimers Butcher v Lachlan Elder Realty FPBCL p 326-7 Facts  LER, a real estate agent, published a brochure advertising a property. This brochure contained a survey diagram that had been provided by the vendor’s solicitors. This diagram was inaccurate.  The brochure also contained the following statement: “All information contained herein is gathered from sources we believe to be reliable. However we cannot guarantee it’s [sic] accuracy and interested persons should rely on their own enquiries”  B was given a brochure and ultimately decided to purchase the property.  B refused to go ahead with the contract, and sought damages from LER (the amount of the lost deposit).  NOTE: B did not seek to cancel the contract on this basis, as suggested in the text book Conduct that is misleading or deceptive: Disclaimers Butcher v Lachlan Elder Realty Issue  Given the diagram was inaccurate, was the brochure misleading or deceptive? Decision  The brochure was not misleading. Reason  Although in small print, the disclaimer was legible, and would be noticed by a reasonable person given the value of the property advertised for sale.  The disclaimer changed the nature of the conduct:  From: an unqualified representation about the accuracy of the survey diagram reproduced.  To: a representation that the diagram comes from what is believed to be a reliable source but that other than that, LER’s conduct was limited to ‘passing on’ the information provided by the vendor for what it was worth. Conduct that is misleading or deceptive: Intention It is not necessary to prove that the conduct was either intentional or negligent.  Yorke v Lucas Conduct that is misleading or deceptive: Intention Yorke v Lucas FPBCL p 439-40 Facts  Treasureway (T) appointed Ross Lucas Pty Ltd (L) to act as its agent to sell T’s record shop business.  Yorke (Y) purchased the record shop from T.  T provided misleading information to L. L passed the misleading information on to Y.  Unlike the real estate agent in the Butcher case, L did not make it clear that he was simply passing on the information for what it was worth. Issue  Did L engage in misleading conduct by passing on the misleading information? Conduct that is misleading or deceptive: Intention Yorke v Lucas (ctd) Decision  L engaged in misleading conduct by passing on the misleading information. Reason  It did not matter that L believed the information to be true.  The information was inaccurate, and thus misleading.  Note  T was also found to have engaged in misleading conduct (it authored the misleading information).  Unlike the real estate in Butcher, L had not made it clear it was simply passing on the information.