Australian Consumer Law: Misleading & Deceptive and Unconscionable Conduct

If you’ve ever entered into a consumer agreement only to find yourself with a product or service that falls utterly short of what was promised, it’s possible that you were misled or deceived into entering into the agreement.

By section 18 of Australian Consumer Law (ACL), it is stated that in “trade or commerce”, a person must not intentionally or unintentionally “mislead or deceive” another person. This obligation is also imposed on trading and financial corporations, businesses and not-for-profit organisations.[1] It is not possible to exclude statutory liability from the obligation not to mislead or deceive another, although a disclaimer clause may be considered when determining whether conduct is misleading or not. 

in “Trade or Commerce”

Actions in the course of trade or commerce must have a business character. This includes negotiations, one-off business sales and the supply of goods or services, but not personal transactions and private sales.[2]

By way of example, the sale and purchase of real property between individuals would ordinarily be considered a private sale. However, the sale could be considered a transaction in ‘trade or commerce’ if it’s a sale by a property development company of off-the-plan properties as the sale would then be characterised as one that has business character, wherein a corporation is seeking to advance its commercial interests. 

“Misleading and Deceptive Conduct”

Misleading conduct can include:[3]

  • Acts;
  • Omissions;
  • Representations;
  • Promises;
  • Predictions;
  • Professional opinions;
  • Endorsements;
  • Passing of information; and
  • Silence. 

It is also not necessary for someone to be actually misled; it is sufficient for someone to have been likely to be misled or deceived.

The Court will also consider the class of consumers the conduct was directed to. This may be the public at large, or a particular target audience. The average intelligence of the consumers will be assessed, with reference to the nature of the dealings, commercial experience, and whether they are gullible or well-educated.[4] The Courts will then ask the question: ‘would a hypothetical, reasonable member of the class likely be misled or deceived by the conduct?’

 Considerations made can include:

  • Level of generality and subjectivity of the statement;
  • People’s ability to inspect and verify the statement;
  • The prominent features;
  • The experience of the person making the statement; and
  • Bargaining power.

Statements or predictions about future matters may also be misleading where there is no reasonable grounds for the statement – the person who made the statement must provide evidence of their reasonable grounds.[5]

Silence will be misleading where a material fact is failed to be disclosed.[6] This includes where there is a reasonable expectation of disclosure, a statement of half-truth, an undisclosed change of circumstances and an inaccurate statement made without correction. Typically, silence must be accompanied with an act, but where there is mere silence, there must be an intention to mislead.

Remedies

The claimant may seek damages for current and future losses so long as there is a connection between the conduct and the loss.[7] The Court may also vary the contract, declare the contract partially or wholly void, or order an injunction where the conduct is continuing.[8]

Unconscionable Conduct

An alternative to section 18 of the ACL is section 21 of the ACL, wherein unconscionable conduct is prohibited in business transactions. Unconscionable conduct is where a person attempts to enforce or retain the benefit of a dealing with another person under a special disability, where it is not in good conscience to do so. The basis of the action is unequal bargaining positions.

Unconscionable conduct is prohibited in business transactions, which means the conduct must also have occurred in ‘trade or commerce’ (see above).

When determining whether the act was unconscionable, the Court will consider the following factors (non-exhaustive):[9]

  • bargaining positions;
  • how necessary the contracted conditions are to protect the person/company’s legitimate interests;
  • the clarity of the written documents;
  • undue influence;
  • alternative goods or services available;
  • the supplier’s usual conduct;
  • industry code requirements; and
  • level of disclosure and terms of the contracts.

The remedies available are the same as those available for a claim for misleading and deceptive conduct (see above). If you believe you have been misled or deceived, please do not hesitate to contact our office on (07) 3252 0011 so we can put you in touch with one of our experienced law

Written by Hongi Han & Lauren Hooper

[1] Houghton v Arms [2006].

[2] Wright Rubber v Bayer AG (2008).

[3] Demagogue v Ramensky (1992).

[4] Parkdale v Puxu [1982].

[5] s 4 ACL.

[6] Demagogue v Ramensky (1992).

[7] s 236 ACL.

[8] ss 232, 243 ACL.

[9] s 22 ACL.

 

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