Misleading and Deceptive Conduct 2. False Representations 9. Unfair Sales Techniques 13. Consumer Guarantees 19. Unfair Contract Terms 29

Competition and Consumer Law LW303 COMPETITION AND CONSUMER LAW Misleading and Deceptive Conduct 2 False Representations 9 Unfair Sales Techniqu...
Author: Audrey Anthony
5 downloads 0 Views 877KB Size
Competition and Consumer Law

LW303 COMPETITION AND CONSUMER LAW

Misleading and Deceptive Conduct

2

False Representations

9

Unfair Sales Techniques

13

Consumer Guarantees

19

Unfair Contract Terms

29

Unsolicited Contract Agreements

33

Competition Law – introduction

36

Horizontal Agreements

41

Vertical Agreements

47

Exam Information: -

70 marks, 3 hours

-

Part A: General Consumer Protection

-

Part B: Specific Consumer Protection

-

Part C: Competition Law

1

Competition and Consumer Law

Misleading and or Deceptive Conduct Section 18  ‘a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead or deceive’ Elements of MDC  Section 18 provides the following elements: 1) A corporation or person 2) Engages in conduct 3) ‘In trade or commerce’; that is 4) Misleading or deceptive or likely to mislead or deceive

1 Corporation or Person?  First it must be established whether the subject can be considered a ‘person’ for the purposes of s18  CCA refers to ‘persons’ not ‘corporations’.  A person can include a natural person or a corporation 2 Within Trade or Commerce  Section 2 of the Act defines this as o ‘trade or commerce within Australia; or trade and commerce between Australia and places outside Australia; and includes any business or professional activity  

The exclusive limits of whether or not conduct is considered to be within trade or commerce has not been defined by the courts – Plimer v Roberts Each case is determined on its own facts – Village Building Co Ltd v Canberra International Airport

3 Engagement in Conduct  There must be engagement in conduct  Section 4(2) provides that this includes doing or refusing to do an act, giving effect to a provision of a contract or arrangement or arriving at or giving effect to an understanding  Two areas of relevant ‘conduct’ can give rise to problems: o Conduct by silence o Conduct by an intermediary involving the relaying of information a) Conduct by silence o Section 2(2)(c) of the ACL provides the following definition ‘A reference to refusing to do an act includes a reference to: (i) Refraining (otherwise than inadvertently from doing that act; or (ii) Making it known that the act will not be done.’ o The essential question is, whether in all of the circumstances constituted by acts, omissions, statements or silence, there has been conduct likely to mislead or deceive – General Newspaper v Telstra Corp

2

Competition and Consumer Law

b) Conduct by an intermediary o If an intermediary merely passes on information making it clear that he or she is not the source of the information and disclaims belief in its truth or falsity, that person may not engage in misleading conduct – Yorke v Lucas o A representation is conveyed in circumstances in which the carrier would be regarded by the relevant section of the public as adopting it, then he makes that representation – Gardam v George Wills & Co, per French J o While, in any given instance there can be more than one person who engages in the misleading or deceptive conduct, the level of involvement of each person must be independently assessed and whether or not each person will be found to have been so engaged will depend on the facts – Cassidy v Saatchi 4 Misleading or Deceptive Conduct  The conduct must be misleading or deceptive or likely to mislead or deceive: s18  Conduct will be misleading or deceptive if is induces or is capable of inducing error – ACCC v TPG  What the conduct in question conveys is always a question of fact to be determined having regard to all of the contextual circumstances within which something was said or done - Global One Mobile Entertainment Pty Ltd v ACCC 

Intent: o The test is an objective one, the question of intent does not arise - ACCC v Dukemaster o All that is relevant is whether, tested objectively, the conduct was misleading or deceptive or likely to mislead or deceive – Hornsby Building Information v Sydney Building Information



Likely to mislead or deceive: o It is unnecessary to prove that the conduct in question actually deceived or mislead anyone – Parkdale Custom Built Furniture v Puxu o Conduct is likely to mislead or deceive if that is a real or not remote chance or possibility, regardless of whether it is less or more than 50% - Global Sportsman v Mirror Newspapers



Causation – doctrine of erroneous assumption o The relevant test is: - What is the likely reason to the representations by ordinary or reasonable members of the class to who, the representation is directed – Campomar o No conduct can be misleading or deceptive unless the person to whom the conduct is directed labors under some error – Taco Co of Australia Inc v Taco Bell o It is not sufficient for the conduct to cause confusion or wonderment for the conduct to be misleading or deceptive – Campomar v Nike International o Such error can range from: Taco Co of Australia v Taco Bell - The obvious, such as an assumption that an express representation is credible; - The predictable, such as a common assumption that the goods marketed under a trade name corresponding to a trade name that is well known in relation to the foods of the same type, have some connection with the manufacturer of a well known brand; and - The fanciful, such as the assumption that the mere fact that a person sells goods means that he is the manufacture of those goods.

3

Competition and Consumer Law



Class of consumers o The misleading and deceptive conduct must be considered with respect to the class of consumers who are likely to be affected by the conduct – Parkdale Custom Built Furniture v Puxu o The conduct must then be considered with reference to the reasonable person within the targeted class of consumers – Campomar o People within that class including the astute and gullible, the intelligent and not so intelligent, well educated and poorly educated must also be taken into account – Taco Co of Australia v Taco Bell o Assumptions by persons whose reactions are extreme or fanciful should be disregarded – Campomar o Successive majorities in the HC have held that the applicant needs to establish that that a ‘significant’ or ‘substantial’ proportion of persons within the relevant market would be likely to be mislead – 10th Cantanae v Shoshana

Method to determine whether conduct was misleading or deceptive under section 18 Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 – (‘Taco Bell steps’) 1. Step One:  Identify the relevant section or sections of the public by reference to whom the question of whether the conduct is, or is likely to be, misleading or deceptive falls to be tested 2. Step Two:  Second, one the relevant section of the public is established, the matter is to be considered by reference to all who come within it, including the astute and the gullible, the intelligent and the not so intelligent, the well educated and the poorly educated, men and women of various ages pursuing a variety of vocations  This is a wide test however its approach has been somewhat limited by the HC decision in Compomar v Nike International, where it was held that a court ought to focus on the ‘ordinary or reasonable members’ of the section of the public identified in step 1, and has the right to decline in regards to ‘assumptions by persons whose reactions are extreme or fanciful’ as controlling the application of s52  Despite this decision, recent cases make clear that the exact details of the type of person within the relevant group that a court will have regard to is somewhat unsettled 3. Step Three:  Thirdly, evidence that some person has in fact formed an erroneous conclusion is admissible and may be persuasive but is not essential  The court must determine that question for itself – the test is objective  It should be stressed however that the consequence of the application of an objective test is that there is no requirement that somebody was in fact misled or deceived, and there is no need to show that actual damages are suffered from the misleading or deceptive conduct 4. Step Four:  Finally, it is necessary to inquire why proven misconception as arisen  The fundamental importance of this principle is that it is only by this investigation that the evidence of those who are shown to have been led into error can be evaluated and it can be determined whether they are confused because of misleading or deceptive conduct on the part of the respondent  This step is only of relevance in relation to situations where it has been proved that somebody has, in fact, been misled or deceived  There must be a sufficient nexus between the conduct and the error or misconception 4

Competition and Consumer Law



Puffery o In the ordinary course of commercial dealings, a certain degree of ‘puffing’ or exaggeration is to be expected. Puffery is part of the ordinary stuff of commerce – General Newspapers v Telstra Corp

Advertising  A degree of latitude is to be allowed in relation to advertising as it is, by nature, likely to reflect the enthusiasm of the advertiser to place its product in a favourable light  ‘The public is accustomed to the puffing of products in advertising. It is therefore inappropriate to make distinctions that are too fine or precise – Stuart Alexander & Co v Blenders  The test to be applied is one of reasonableness – Farquhar v Bottom  The court should consider the degree of care with which the ordinary reader would have read the advertisement - Farquhar v Bottom Categories of Conduct 1. Comparative advertising campaigns  There is…a heavy responsibility on it [the respondent] to ensure that that its comparisons are accurate, for inaccurate comparisons are inherently likely to mislead the public – State Government Insurance Commission v JM Insurance, per Fisher J  In order to avoid being regarded as misleading or deceptive, comparative advertising should be between actual competitors and competing products and the comparisons between competitors should be ‘appropriate’ comparisons  It would be inconsistent with the policy and objectives of the Act to restrict a trader from publicising truthfully, a feature of it product which is superior to the same feature of a competitors – Gillette v Energizer  Comparative advertising, when accurate, assists consumer choice – Gillette v Energizer  Errors in comparative advertising may have a greater potential to mislead consumers than statements made in ordinary advertisements which may be perceived as mere puffs – TPC v Telstra  A comparative advisement may be misleading because it omits material that would be necessary to make the comparison fair – Hoover v Email Ltd  However, the fact that comparative advertisement does not contain all of the features of the products compared will not necessarily make it misleading – Gillette v Energizer

2. Character merchandising  What is character merchandising: o The creation of an association with the character not the making of precise representations Pacific Dunlop v Hogan  Pacific Dunlop v Hogan: o Court considered a TV ad which suggested that the product had some kind of association with the character Crocodile Dundee o In finding that the advertisement was misleading, Burchett J said: - The only medium likely to convey the vague message of character merchandising…is television

5

Competition and Consumer Law

-



This involves the application of established principles in an unfamiliar setting, where the persuasive feature is not so much the making of statements that may mislead the mind directly, as suggestions that may inveigle the emotions into false responses - The question is whether the vagueness of the message prevents the application of s52 An express disclaimer can, if prominent enough, destroy any suggestion of association between two products – Twentieth Century Fox Film Corp v SA Brewing

3. Representations/opinions/predictions about the future  Promises, Predictions and Opinions o A promise that is not fulfilled, or a prediction or opinion that does not eventuate can amount to misleading or deceptive conduct, but only in limited circumstances o

These circumstances include where a prediction promise or opinion: - Contains an implied representation of present fact, such as that the maker believes something to be true – Global Sportsman v Mirror Newspapers - Consists of a representation as to a future matter and the maker does not have reasonable grounds for making the representation: ACL s4

o Consequently, misleading or deceptive conduct will include: - Where the person making the prediction knew it to be false or made it with reckless disregard for whether it was true or false – Thompson v Mastertouch - Where the person making a promise or prediction is taken to have represented that he or she is capable of performing the promise or ensuring that the prediction comes true; and - Where the promise is a representation with respect to a future matter, or the subject matter if a prediction, and those making the promise or prediction do not have reasonable grounds for making it, unless they can establish that the promise or prediction was made on reasonable grounds 

Future opinions o Usually, statements about future matters which do not come true, are not misleading or deceptive o

Two important points: - A representation as to a future matter that does not eventuate will not be misleading or deceptive in breach of section 18 without more; - The ‘more’ that is required to ripen a future representation into a misleading representation exists where the future representation carries with it an implied statement of present or past fact.

o

An aggrieved party must establish that the future representation: - Contained an implied statement of present or past fact about the maker’s state of mind or intention; and - That the maker of the future representation did not have reasonable grounds for holding that state of mind, intention or for making that future representation.

6

Suggest Documents