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Misleading or Deceptive Conduct

Pre-contractual misrepresentations may provide contractual remedies at common law or statutory remedies pursuant to the Competition and Consumer Act 2010 (Cth) (previously the Trade Practices Act 1974 (Cth)). The latter is more commonly used as it operates in a wider range of circumstances and generally provides better remedies.

Misleading or deceptive conduct (statutory prohibition)

The statutory prohibition of misleading and deceptive conduct can now be found in s 18 of the Australian Consumer Law (contained in schedule 2 of the Competition and Consumer Act 2010 (Cth)) (previously the provision was s 52 of the Trade Practices Act and much of the case law - as well as many practitioners - will still refer to 's 52).  Section 18 provides:

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.

The reference to 'trade or commerce' excludes purely private sales but captures most commercial activity. Where a breach of section 18 is established a range of remedies are available including damages and contractual avoidance or variation.

News

The ACCC recently (2013) lost a High Court case relating to misleading and deceptive conduct. The ACCC alleged Google had engaged in misleading or deceptive conduct in relation to its display of sponsored links. The High Court held that Google was not responsible for misleading or deceptive representations contained in the links themselves (they were the responsibility of the advertisers themselves). View High Court Decision in Google Inc v ACCC. The High Court released a brief Press Release stating, in part:

The High Court unanimously allowed the appeal. Google did not create the sponsored links that it published or displayed. Ordinary and reasonable users of the Google search engine would have understood that the representations conveyed by the sponsored links were those of the advertisers, and would not have concluded that Google adopted or endorsed the representations. Accordingly, Google did not engage in conduct that was misleading or deceptive.

Google Inc v ACCC [2013] HCA 1

Further reading

 

Common law misrepresentation

Common law misrepresentation overlaps with the statutory misleading conduct provisions and in practice is only relevant where the CCA does not apply; that is, in non-commercial contexts. An actionable pre-contractual misrepresentation occurs where a party makes a 'false representation' (orally, in writing or by conduct), the representation is one of fact (rather than a statement of opinion of law or a prediction about the future), it must be made to the other contracting party and it must induce the contract. Where established the key remedy is rescission (generally damages are not available unless the misrepresentation constitutes a tort - that is, it is also fraudulent or negligent - in which case tortious (but not contractual) damages may be available). Even where misrepresentation is established there are some limits on rescission - most significantly, if restitution is not possible the right to rescind will be lost.

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