MISLEADING AND DECEPTIVE CONDUCT AND THE TRADE PRACTICES ACT

The Trade Practices Act 1974 (Cth) provides, amongst other things, guidelines as to:

• how companies may conduct business;
• protection from anti competitive or monopolistic business practices; and
• the rights of consumers

An over keen sales representative or flamboyant marketing material can make all sorts of representations as to the capabilities of the company's goods in an attempt to secure a sale. If these representations are misleading, deceptive or false, the company and the individual may be sued. Such statements may be specific such as “this software package can process 100 invoices a minute”, or more general, for example “we know that this software will satisfy your requirements”. Other representations could include claims that: goods or services are of a particular standard; goods are new; facilities for repair and spare parts are available; or that goods were made in a certain place.

If you know that your customer is under a misapprehension about your product and you do not correct that misapprehension, your conduct could be interpreted as being misleading. Remember, it is not necessary that a person intends to be misleading. It is the nature and content of the representation that is important.

You should consider the effect of the representation on a person of average intelligence and with background knowledge.

You should also be wary of predictions and opinions. A prediction does not have to come true to avoid being misleading or deceptive. However, if the prediction does not come true and was made by a person who had no reasonable grounds for making the prediction it may be held to have been misleading or deceptive. Similarly, a person who gives an opinion must ensure that they honestly and reasonably hold that opinion.

An action for misleading and deceptive conduct at any time up to three years after the statement was made. As well as being misleading or deceptive, some statements, if false, can expose the company and the individual to criminal as well as civil liability.

The Trade Practices Act 1974 (Cth) usually only applies to corporations, however, if you trade as an individual you may be covered by equivalent state legislation which has similar provisions.

STEVE WHITE
WHITE SW COMPUTER LAW
JULY 1997 www.computerlaw.com.au © White SW Computer Law 1997 This article is a guide only and should not be used as a substitute for proper legal advice, readers should make their own enquiries and seek appropriate legal advice.