Misleading or Deceptive Conduct

Note: on 1 January 2011 the Trade Practices Act was renamed the 'Competition and Consumer Act 2011' and the full Australian Consumer Law took effect. This included the repeal of Part V of the TPA, including s 52 dealing with misleading and deceptive conduct. An equivalent provision is now contained in s 18 of the Australian Consumer Law (contained in Schedule 2 of the Competition and Consumer Act 2011). Although the substance of the provision is likely to be the same, the following text currently still refers to the old s 52 and, as such, should be treated with care - it will be updated shortly.

Pre-contractual misrepresentations may provide contractual remedies at common law or statutory remedies pursuant to the Trade Practices Act 1974 (Cth) and equivalent state fair trading legislation. The latter is more commonly used as the statutory prohibition provides a more expansive range of remedies and in most cases is more easily established.

Section 52 of the Trade Practices Act 1974 (Cth) prohibits a corporation, in trade or commerce, engaging in conduct that is 'misleading or deceptive or is likely to mislead or deceive'. State and territory legislation mirrors this prohibition but extends it beyond corproations to 'individuals' acting in trade or commerce. The key 'trade or commerce' limitation excludes purely private sales but captures most commercial activity. Where a breach of section 52 or state equivalents is established a range of remedies are available including damages and contractual avoidance or variation.

Common law misrepresentation overlaps with the statutory misleading conduct provisions and in practice is only relevant where the TPA or state equivalents do 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.

Detailed discussion forthcoming