Misleading or Deceptive Conduct

By Warren Pengilly

Law is, in these days, highly technical. But one thing that is easy to understand is the prohibition in the Trade Practices Act on engaging in conduct which is misleading or deceptive or likely to mislead or deceive. The prohibition is wide ranging.

‘Misleading’ simply means to lead a person astray. ‘Deceive’ means to get the better of someone by guile or trickery. The real issue is the impression given to a party by conduct and not the formal legalities involved. So one can mislead by not disclosing a salient fact which a party would assume would be disclosed or by creating an impression as to a fact and then attempting to negate that impression by small print exclusions in a document. It is no defence that you did not intend to mislead if in fact a party is misled. If a party is misled, it is no defence that he or she should have made his or her own enquiries to ascertain the true position. People are entitled to rely upon what you say. The Trade Practices Act also provides that, in relation to any future matter, anything you say or do must be based on reasonable grounds. This aims to prevent unreasonable representations being made as to future returns or profits. The onus is on the maker of the statement to prove its reasonableness when made. Misleading representations are the most litigated provisions of the Trade Practices Act. Parties can bring private damages actions. The Australian Competition and Consumer Commission can also bring litigation. Compliance, however, involves wider considerations than the fear of litigation. It is fundamentally a matter of the law enforcing basic business ethics. Basic principles ensure compliance. Evaluate your conduct from the view of the person who is not particularly well informed or not so well educated and ask the following questions in relation to everything you do:

  • Is it the truth?
  • Is it the whole truth?
  • Does it convey a truthful impression?

No-one should have any difficulty in complying with a law which the ethical trader would regard as basic to his or her standards of what is right. Now, however, proper ethics are backed by enforceable legislation. Only the unethical trader need fear this law. Ethical traders must welcome it. Be under no illusions, however. The consequences of non-compliance can be serious.