08 Jul Misleading or Deceptive, False and Misleading and Misrepresentation: What are the differences?
The terms misleading, deceptive, false and misrepresentation are often used interchangeably in everyday language. However, in the context of commercial law, these terms can refer to multiple, distinct causes of action that exist within Australia’s statutory and common law consumer protections regime.
Misleading and Deceptive Conduct
Misleading and deceptive conduct under section 18 of Schedule 2 to the Competition and Consumer Act 2010 (Cth) (Australian Consumer Law, or ACL) is the frequently referred claim or cause of action in consumer protection matters.
Section 18 of the ACL, in summary, prohibits a person from engaging in conduct that is, or that is likely, to mislead or deceive. The section covers all forms of business practice, such as advertising, promotions, packaging, and labeling, and an individual or business can contravene it unknowingly and without intent.
For more information about misleading and deceptive conduct, please see out article here.
False and Misleading Representations
Section 29 of the ACL also addresses misleading conduct. This provision prohibits making false and misleading representations about goods or services as to:
a. the standard, quality value, grade, composition, style or model of a good;
b. the standard, quality, value or grade of a service;
c. whether a good is new;
d. whether a particular person has agreed to acquire a good or service;
e. testimonials by any person relating to a good or service;
f. testimonials by any person, or representations that purport to be testimonials, relating to a good or service;
g. sponsorship, approval, performance characteristics, accessories, uses or benefits relating to a good or service;
h. representations of a person having sponsorship, approval or affiliation;
i. the price of a good or service;
j. the availability of facilities for the repair of a goods or spare parts for a good;
k. the place of origin of a good;
l. the need for a good or service;
m. the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy; or
n. a requirement to pay for a contractual right that is wholly or partly equivalent to any condition, warranty, guarantee, right or remedy that a person has under any law.
A reverse onus determines whether a representation that contravenes any of the prohibitions at a. to f. above. That is, a court will presume that representation is misleading unless the person who made the representation proves otherwise.
The primary difference between this provision and section 18 of the ACL is section 29 only applies to specific representations and section 18 broadly applies to any conduct in trade or commerce. Courts can order pecuniary penalties for contravening s 29 of the ACL. Courts cannot for contravening s 18 of the ACL.
Misrepresentation
Another related cause of action is common law misrepresentation. In contrast to misleading or deceptive conduct, or false and misleading representations, misrepresentation does not have a foundation in statute.
Misrepresentation occurs when one party makes a false statement of a material fact to another to induce that other party to enter into a contract.
Historically, there have been two classes of misrepresentation, namely fraudulent misrepresentation and innocent representation.
Fraudulent misrepresentation refers to false statements that were made knowingly, without belief in its truth, with the intention to deceive another party. A remedy to fraudulent misrepresentation may include rescission of a contract and damages.
Innocent misrepresentation refers to false statements that were made honestly, with a genuine but mistaken belief in their truth. The primary difference between fraudulent misrepresentation and innocent misrepresentation is the intention of the person making the representation. If a court finds a misrepresentation to be innocent, a party can seek rescission of contract, but they generally cannot claim damages.
Since the decision in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, courts have recognised a newer class of misrepresentation; innocent misrepresentations negligently made or, negligent misrepresentation. Negligent misrepresentations occur when a false statement breaches a legally recognised duty of care. If you can prove a claim for negligent misrepresentation, you can claim damages at common law.
Conclusion
Businesses and business people must be careful when engaging with the sale of goods or services not to be misleading, deceptive, deceitful or generally confusing. Australia’s consumer protections are strong and any conduct that causes consumers harm will most likely contravene the Australian Consumer Law. Conduct that does not contravene the Australian Consumer Law can otherwise lead to a claim at common law.
GENERAL AND CONTACT INFORMATION
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