Misleading and deceptive conduct and false and misleading representations by corporations in trade or commerce are prohibited under the Australian Consumer Law (ACL) (which is Sch 2 to the Competition and Consumer Act 2010 (Cth) (CCA)). Such conduct by unincorporated entities and individuals is also prohibited by reason of the fact that each State and Territory has enacted legislation to apply the ACL as a law of its jurisdiction.

Part 2-1 of the ACL sets out the general prohibitions in relation to misleading and deceptive conduct.

Part 3-1 , Division 1 of the ACL sets out the specific prohibitions in relation to false and misleading representations.

These provisions do not apply to conduct involving the supply of financial services and products, but provisions exist in ss 12DA , DB and DC of the Australian Securities and Investment Commission Act 2001 (Cth) (ASIC Act) which largely mirror some of the ACL provisions.

Engaging in conduct which is false or misleading and deceptive exposes a party to liability to actions by the Australian Competition and Consumer Commission (ACCC), including for civil and criminal penalties, as well as claims by third parties who have suffered loss and damage in reliance on such conduct.

Section 18 of the ACL prohibits a person, in trade or commerce, from engaging in conduct that is misleading or deceptive or likely to mislead or deceive.

Misleading and deceptive conduct can occur by:

• direct or express statements or representations;

• conduct — acting in a certain manner;

• implied representations;

• silence — where there is a requirement to disclose a matter; or

• omission — failing to act in a certain manner.

In-house counsel should be aware that the conduct of any business teams who have contact with businesses, individuals (including suppliers) or consumers could lead to exposure for breaches of s 18 of the ACL. These commonly but not exclusively include marketing and advertising, public relations, sales, and procurement teams.

The conduct must occur in trade or commerce to fall within the prohibition. It should not be automatically assumed that, just because conduct is engaged in by someone in business, it will fall within the ambit of trade and commerce. Each situation should be considered on its facts.

Intention to mislead or deceive is irrelevant. A person can be found to have misled or deceived even if it was not intended.

Whether conduct is misleading or deceptive is a question of fact determined by considering the conduct as a whole.

Section 19 of the ACL provides a limited exemption to information providers, such as publishers, radio and television stations, from liability for misleading and deceptive conduct where the publication occurs in the course of carrying on their business.

See The general prohibition.

Section 29 of the ACL prohibits, in connection with the supply or possible supply or promotion of goods or services:

• false or misleading representations about the standard, quality, value, grade, composition, style, model, history, or use of goods (s 29(1)(a) ) or the standard, quality, value or grade of services (s 29(1)(b) );

• false or misleading representations that goods are new (s 29(1)(c) );

• false or misleading representations that a particular person has agreed to acquire goods or services (s 29(1)(d) );

• false or misleading testimonials about goods or services (s 29(1)(e) );

• false or misleading representations concerning testimonials about goods or services (s 29(1)(f) );

• false or misleading representations about sponsorship, approval, affiliation, performance characteristics, accessories, uses or benefits of goods or services (s 29(1)(g) ) or that the person making the representation has sponsorship, approval or affiliation (s 29(1)(h) );

• false or misleading representations concerning the price of goods or services (s 29(1)(i) );

• false or misleading representations concerning the availability of spare parts or facilities for the repair of goods (s 29(1)(j) );

• false or misleading representations concerning the place of origin of goods (s 29(1)(k) );

• false or misleading representations concerning the need for goods or services (s 29(1)(l) );

• false or misleading representations concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy (s 29(1)(m) ); and

• false or misleading representations concerning the requirement to pay for a contractual right that is wholly or partly equivalent to a condition, warranty, guarantee, right or remedy (including a statutory guarantee) or a right at law (s 29(1)(n) ).

Engaging in conduct in breach of s 29 is an offence (see s 151 of the ACL).

See False and misleading representations.

The ACL also sets out certain specific types of conduct which is prohibited:

• Section 30 prohibits false or misleading representations in connection with the sale or grant of an interest in land.

• Section 31 prohibits misleading conduct relating to employment.

• Section 33 prohibits misleading conduct as to the nature, manufacturing process, characteristics, suitability for purpose or the quantity of goods.

• Section 34 prohibits misleading conduct as to the nature, characteristics, suitability for purpose or the quantity of services.

• Section 37 prohibits false or misleading representations concerning the profitability, risk or other key aspects of certain business activities.

See Specific prohibitions.

Section 4(1) of the ACL provides that representations as to future matters will be misleading if:

• a person makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act); and

• the person does not have reasonable grounds for making the representation.

Section 4(2) of the ACL provides that the maker of the representation with respect to any future matter is to be deemed not to have had reasonable grounds for making the representation unless it adduces evidence to the contrary.

This is commonly an issue for marketing and sales teams of the business, whose role includes making goods and services look attractive to the consumer.

See Representations as to future matters.

Silence may amount to misleading and deceptive conduct. The key question is whether, in all of the circumstances constituted by any acts or omissions, statements or silence, there has been conduct likely to mislead or deceive.

See Silence as misleading.

An objective test is used to decide whether conduct or representations are misleading and deceptive.

The test is whether, when viewed objectively and in the context of all of the circumstances, the conduct in question has misled or deceived or is likely to mislead or deceive reasonable members of the class of persons to whom the conduct is directed.

The time at which conduct or representations are to be judged is the time at which they are made. Simply because a matter which was the subject of conduct or a representation does not subsequently come true does not make the conduct or representation misleading or deceptive at the time it was made.

See When will conduct be misleading?

A key thing for in-house counsel to keep in mind when reviewing advertising copy is that a person or corporation cannot simply rely on a disclaimer or exclusion clause to avoid liability for a misleading and deceptive conduct claim. However, in some circumstances, an express disclaimer that is prominently displayed such that it forms part of the overall message may operate to render accurate a statement or conduct which would otherwise be misleading or deceptive.

See Disclaimers and exclusion clauses.