The Australian Consumer Law (ACL) contains all the legal requirements, remedies, and courses of action relevant for businesses and individuals that deal ‘in trade or commerce’. What this means is that it essentially covers everybody, whether you are a consumer buying products or services, or whether you run a business that sells them to individuals or other businesses. It’s then a good idea to be familiar with the ACL and your rights and obligations under it. We have put together a cheat sheet on one of the more commonly litigated sections of the ACL, s18 – misleading or deceptive conduct.
What Does Section 18 Say?
“A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”
This section of the ACL covers conduct across a wide range of business activities including contractual agreements, other commercial negotiations, and advertisements. Engaging in conduct also means ‘doing or refusing to do any act.’ Conduct can also be described as making or giving a representation of something.
Was the Conduct Misleading or Deceptive?
Determining whether certain conduct was misleading or deceptive is a question of fact, determined by looking at the circumstances of each case. The wording ‘likely to have’ in section 18 means the plaintiff doesn’t need to prove the conduct has actually misled or deceived a person, merely that the conduct is misleading or deceptive. The conduct in question will also satisfy s 18 if it leads a person into error. This would give rise to a ‘causal connection’ between the conduct and the error made by a person relying on the misleading or deceptive conduct. If the person suffered any loss as a result of the conduct, they would also be entitled to damages.
The conduct does not have to be intentional (although this may be helpful to assess whether conduct has led a person into error). This was discussed in Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435, where the ACCC claimed that Google had engaged in misleading or deceptive conduct for displaying paid advertisements on its search engine that were misleading or deceptive.
The class of persons considered in the context of the conduct is relevant. The question is whether an ordinary or reasonable person in the identified class of affected persons would have been misled or deceived (Google v ACCC).
Different Types of Conduct
Aside from statements or representations made, it is important to consider other kinds of conduct:
1. Statements about the future
Statements made about the future can also be misleading in some circumstances. It is not a contravention of the Act to make a prediction or express an opinion about things that may occur in the future, if the statement is made in respect of present facts (e.g. an assertion that a person is capable of performing a promise at a later date). The conduct may be deemed misleading if the facts are untrue and if the maker of the future representation did not have reasonable grounds for holding that state of mind or for making that future representation (e.g. a projection about the future profitability of a business).
2. Passing on information
A person who passes on misleading information from a primary source can themselves fall foul of section 18, but only if they ‘create, adopt or endorse’ the information (Google v ACCC). The nature of the transaction as a whole will affect the assessment, including the parties, the particular information, and whether or not there were any disclaimers.
3. Silence as conduct
In some circumstances, a person’s silence can amount to misleading or deceptive conduct. The key to determining whether silence is misleading is to look at whether there is a reasonable expectation that a certain matter or fact would be disclosed. It may be difficult to rely on silence, however, to seek relief under the prohibition on misleading or deceptive conduct in commercial negotiations, as this might require a party to disclose information that could assist the other party. ‘Hard bargaining’ is a commercial reality, and if contractual terms have been entered into voluntarily, the general principles of contract law state that there will be a valid and enforceable agreement.
Who is Liable?
A person can pursue an individual or a company (as both are ‘legal persons’ under the Act). Also, consider whether the conduct was undertaken personally or on behalf of (or as agent for) another entity, and whether a third party was ‘involved’ in the contravention within the meaning of the Act.
If an employee is acting in the trade or commerce of their employer’s business and makes misleading representations or is otherwise involved in misleading conduct, then those employees are also liable (see Houghton v Arms  HCA 59, and for an ACL example, Alpen v Richards  FCA 1387).
There are multiple remedies available for contraventions of section 18 of the ACL:
- Damages: Section 236 provides that a person who suffers loss or damage because of the contravention may recover the amount of that loss or damage. The action must be brought within six years of when loss or damage was suffered.
- Injunction: An injunction is a court order that requires a person do something or refrain from doing something.
- Compensatory orders: Section 237 gives a court power to make orders against the contravening person to compensate the person who has brought the claim, whether that person has suffered injury or is likely to.
There are obviously significant ramifications if you or your employees contravene the ACL. If you have any questions or require advice on the ACL, get in touch with our consumer law team.