Competition and Consumer Law - Misleading and Deceptive Conduct
November 2013
What is it and how do I avoid it?
Legal terminology is never the easiest thing to remember. However, every so often our parliamentarians draft a term which rolls off the tongue and becomes widely used, but we don’t always understand its significance.
“Misleading and Deceptive Conduct” is one such term. What is it exactly and how do I ensure that my business steers well clear of any accusations of it?
Firstly, let’s look at the actual provision itself, being Section 18 of the Australian Consumer Law (which is itself, Schedule 2 of the Competition and Consumer Act 2010 (Act)):
“18. Misleading or deceptive conduct
(1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”
Obviously, a person is a natural person but for the purposes of the Act, a person is also a business partnership or a company. Conduct in trade or commerce covers the buying and selling of goods and services but readers should note that Judges have also applied this law to employment negotiations as these are undertaken for the overall purpose of trading activities. Also worth noting is that public commentary by a business or industry group such as one of the many [tourism authorities] or trade advisory entities may also be held to be conduct in trade or commerce where that commentary has the underlying purpose of promoting that industry. For example, if a [tourism] operator puts out a press release which passes comment on an environmental impact study which may at some future point constrain their operations, this will fall within the ambit of the Act.
This brings us to the heart of the issue. What is misleading or deceptive? The Act and all subsequent judicial interpretations of it are extremely broad. Generally speaking, any situation in trade or commerce will have its facts. Facts being the unquestionable truth with very little room for alternate interpretations of those facts. Any conduct which upon the testing of the evidence shows a divergence from those facts may be held to be misleading or deceptive provided that the person misled can demonstrate that they relied on the conduct in their decision making and have suffered a detriment as a result.
Examples of what the conduct in question may be are also extremely broad. It may be written or verbal words, images, advertisements of any description and in some cases the conduct may be that a person may say nothing at all but by their conduct in remaining silent as to a certain issue allow another party to be misled or deceived.
Does it matter if my conduct is intentional or not? No, it doesn’t. Also note that the Act covers conduct that is likely to mislead or deceive as well as conduct which actually does result in a deception.
In cutting through the legalese, the main areas where readers need to exercise caution are in their advertising and in their contractual arrangements with customers and suppliers. Any advertisement should be an accurate reflection of the services on offer. A charter boat company offering tours through the upper tributaries of the Parramatta River would do well to not feature the Harbour Bridge or the Opera House on its advertising materials. In terms of contractual arrangements, a good starting point is to simply apply common sense. If you provide a written undertaking to do ‘A’, you should exercise your utmost endeavours to do ‘A’ and where ‘A’ may not be possible due to weather fluctuations, ensure that your customers are aware of such variables, and build this into your terms of trade.
Misleading and deceptive conduct should be viewed separately from its cousin under the Australian Consumer Law, “unconscionable conduct”. Unconscionable conduct deals with conduct considered so oppressive as to be beyond hard commercial bargaining and so severe that it goes against good conscience. This cause of action is generally brought into play where a clear inequality of power and sophistication exists between a business and a consumer. For example, the infamous situation which was widely reported in 2007 concerning a number of disreputable operators charging overseas tourists a $100.00 fee to walk on Bondi Beach would, were it ever referred to a Court, be likely to fall within this ever evolving definition. The conduct in question clearly goes beyond being simply misleading and deceptive, it is unconscionable.
In short, honesty is always the best policy. Unfortunately, an irate consumer presents a problem, and this is where we come in to assist you to avoid these problems. For any advice, be it formal or informal, do not hesitate to contact Bradfield & Scott.
This article is not intended to be anything other than thought provoking and is intentionally not a comprehensive treatise. We welcome feedback and are happy to talk to anyone who might wish to seek some elaboration on anything raised in this article.
Mat Henderson
Lawyer
Bradfield & Scott Lawyers
Level 1, 175 Macquarie Street
Sydney NSW 2000
Telephone: 9233 7299
Email: mhenderson@bradscott.com.au
Legal terminology is never the easiest thing to remember. However, every so often our parliamentarians draft a term which rolls off the tongue and becomes widely used, but we don’t always understand its significance.
“Misleading and Deceptive Conduct” is one such term. What is it exactly and how do I ensure that my business steers well clear of any accusations of it?
Firstly, let’s look at the actual provision itself, being Section 18 of the Australian Consumer Law (which is itself, Schedule 2 of the Competition and Consumer Act 2010 (Act)):
“18. Misleading or deceptive conduct
(1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”
Obviously, a person is a natural person but for the purposes of the Act, a person is also a business partnership or a company. Conduct in trade or commerce covers the buying and selling of goods and services but readers should note that Judges have also applied this law to employment negotiations as these are undertaken for the overall purpose of trading activities. Also worth noting is that public commentary by a business or industry group such as one of the many [tourism authorities] or trade advisory entities may also be held to be conduct in trade or commerce where that commentary has the underlying purpose of promoting that industry. For example, if a [tourism] operator puts out a press release which passes comment on an environmental impact study which may at some future point constrain their operations, this will fall within the ambit of the Act.
This brings us to the heart of the issue. What is misleading or deceptive? The Act and all subsequent judicial interpretations of it are extremely broad. Generally speaking, any situation in trade or commerce will have its facts. Facts being the unquestionable truth with very little room for alternate interpretations of those facts. Any conduct which upon the testing of the evidence shows a divergence from those facts may be held to be misleading or deceptive provided that the person misled can demonstrate that they relied on the conduct in their decision making and have suffered a detriment as a result.
Examples of what the conduct in question may be are also extremely broad. It may be written or verbal words, images, advertisements of any description and in some cases the conduct may be that a person may say nothing at all but by their conduct in remaining silent as to a certain issue allow another party to be misled or deceived.
Does it matter if my conduct is intentional or not? No, it doesn’t. Also note that the Act covers conduct that is likely to mislead or deceive as well as conduct which actually does result in a deception.
In cutting through the legalese, the main areas where readers need to exercise caution are in their advertising and in their contractual arrangements with customers and suppliers. Any advertisement should be an accurate reflection of the services on offer. A charter boat company offering tours through the upper tributaries of the Parramatta River would do well to not feature the Harbour Bridge or the Opera House on its advertising materials. In terms of contractual arrangements, a good starting point is to simply apply common sense. If you provide a written undertaking to do ‘A’, you should exercise your utmost endeavours to do ‘A’ and where ‘A’ may not be possible due to weather fluctuations, ensure that your customers are aware of such variables, and build this into your terms of trade.
Misleading and deceptive conduct should be viewed separately from its cousin under the Australian Consumer Law, “unconscionable conduct”. Unconscionable conduct deals with conduct considered so oppressive as to be beyond hard commercial bargaining and so severe that it goes against good conscience. This cause of action is generally brought into play where a clear inequality of power and sophistication exists between a business and a consumer. For example, the infamous situation which was widely reported in 2007 concerning a number of disreputable operators charging overseas tourists a $100.00 fee to walk on Bondi Beach would, were it ever referred to a Court, be likely to fall within this ever evolving definition. The conduct in question clearly goes beyond being simply misleading and deceptive, it is unconscionable.
In short, honesty is always the best policy. Unfortunately, an irate consumer presents a problem, and this is where we come in to assist you to avoid these problems. For any advice, be it formal or informal, do not hesitate to contact Bradfield & Scott.
This article is not intended to be anything other than thought provoking and is intentionally not a comprehensive treatise. We welcome feedback and are happy to talk to anyone who might wish to seek some elaboration on anything raised in this article.
Mat Henderson
Lawyer
Bradfield & Scott Lawyers
Level 1, 175 Macquarie Street
Sydney NSW 2000
Telephone: 9233 7299
Email: mhenderson@bradscott.com.au
