Transcript Section 52 Trade Practices Act Misleading & Deceptive Conduct

THE LAW OF COMMERCIAL CONTRACT
Promissory Estoppel
Sweeney & O’Reilly
1st Ed. Chapter 5 pp 110 – 115
2nd Ed. Pp 142 - 147
THE LAW OF COMMERCIAL CONTRACT
Promisory estoppel
 A strict application of the rules of contract
formation can lead to unjust results
 Courts use equitable jurisdiction to intervene
and prevent unfairness
 Estoppel is used to stop a person from
denying something that they have
represented
 Central London Property Trust v High Trees
House (obiter dicta by Lord Denning) (S&OR
p111\142)
THE LAW OF COMMERCIAL CONTRACT
Promissory estoppel
 Applies where
 No consideration exists
 Formalities of making a contract have not
been satisfied
 Walton Stores v Maher (S&OR p114\146)
THE LAW OF COMMERCIAL CONTRACT
Elements
1. Assumption
The promisee, on reasonable grounds,
believes that a particular legal relationship
exists or will exist
2. Inducement
The promisor created the assumption
3. Reliance
Promisee acts in reliance on promise
4. Detriment
Promisee alters its position to its detriment
THE LAW OF COMMERCIAL CONTRACT
Inducement
 The promisor either
 Induced the assumption; or
 Being aware that the promisee had made
the assumption, deliberately remained
silent in circumstances where the
promisor could reasonably have been
expected to speak
 The promise must be precise and unqualified
 Legione v Hately (S&OR p113\144)
THE LAW OF COMMERCIAL CONTRACT
The Assumption
 The promisee on reasonable grounds
assumed that a particular legal relationship
 Existed; or
 Would exist
 Legal relationship includes:
 A right to something
 Release from an obligation
 For the promisee or someone else
 Now or in the future
THE LAW OF COMMERCIAL CONTRACT
Reliance
 The promisee acted (or refrained from acting)
on the faith of the assumption.
THE LAW OF COMMERCIAL CONTRACT
Detriment
 The promisee will suffer a detriment if the
promisor fails to perform the promise
 Mere failure by the promisor to carry out the
promise will not of itself amount to detriment
 Je Maintiendrai v Quaglia & Quaglia
(S&OR p114\145)
THE LAW OF COMMERCIAL CONTRACT
Remedy
 Minimum orders to prevent detriment
 Not necessarily the same remedy as for
breach of contract
THE LAW OF COMMERCIAL CONTRACT
Section 52 Trade Practices Act
Misleading & Deceptive Conduct
Sweeney & O’Reilly
1st Ed Chapter 3 pp 50 – 60
2nd Ed pp Chapter 3 71 – 84
THE LAW OF COMMERCIAL CONTRACT
Section 52 Trade Practices Act
‘A corporation shall not, in trade or commerce,
engage in conduct that is misleading or
deceptive or is likely to mislead or deceive’
THE LAW OF COMMERCIAL CONTRACT
Elements
 A corporation;
 In trade or commerce;
 Engages in misleading or deceptive conduct;
and
 Conduct is within scope of TPA.
THE LAW OF COMMERCIAL CONTRACT
Scope




Trading, financial or foreign corporation; or
Operating in an Australian Territory; or
Involves an element of interstate trade; or
Conduct used postal, telegraph or telephone
services; or
 In the course of providing goods or services to
the Commonwealth; or
 Conduct by the Commonwealth or one of its
instrumentalities
THE LAW OF COMMERCIAL CONTRACT
Scope (cont.)
 Fair Trading Acts extend scope
‘A person shall not, in trade or commerce,
engage in conduct that is misleading or
deceptive or is likely to mislead or deceive’
(section 9 Fair Trading Act (Vic))
THE LAW OF COMMERCIAL CONTRACT
Exclusions
 Certain financial services are excluded
 These are covered by s12AD Australian
Securities and Commissions Act which is similar
to s52 TPA
THE LAW OF COMMERCIAL CONTRACT
In Trade or Commerce
 Very wide - applies to all ‘commercial’ conduct
 Not just contracts
 Not just consumer contracts
 Covers:
 Product claims
 Statements made during the course of the sale of a business
 Statements made during business negotiations
 Statement by real estate agent during sale of house
 Advice given by a professional person
 Does not include statement of a personal nature
 Political speech
 Statement by house owner during sale of house
THE LAW OF COMMERCIAL CONTRACT
Misleading Conduct
 Does not have to be an express statement of
fact
 Half Truths
Collins Marrickville v Henjo Investments (S&O
p53\74)
THE LAW OF COMMERCIAL CONTRACT
Misleading Conduct (cont.)
 Silence
 If the circumstances are unusual it may be
unreasonable to remain silent
 Demagogue v Remensky (S&O p54\75)
 General Newspapers v Telstra (S&O p54\77)
THE LAW OF COMMERCIAL CONTRACT
Misleading Conduct (cont.)
 Opinions
 An opinion is not normally misleading conduct
unless
 The opinion was not genuinely held
 It is an opinion by an expert
 If it is unsupported by the facts
 RAIA Insurance Brokers v FAI (S&O p55\78)
THE LAW OF COMMERCIAL CONTRACT
Misleading Conduct (cont.)
 Promises & Predictions
 Not normally deceptive conduct unless
 A promise made by a person who has no
intention of carrying it out
 No reasonable grounds for the prediction
(s51A(1) TPA)
 Wheeler Grace & Pierucci v Wright (S&O
p55\78)
THE LAW OF COMMERCIAL CONTRACT
Misleading Conduct (cont.)
 Promises & Predictions (cont.)
 The onus is on the person making a promise
or prediction to prove that he had reasonable
grounds
 section 51A(2) Trade Practices Act)
 Futuretronics v Gadzhis (S&O p56\79)
 Mere puffs
 Not deceptive conduct
THE LAW OF COMMERCIAL CONTRACT
Mental element
 No requirement for:
 Fraud; or
 Negligence
 Yorke v Ros Lucas (S&O p52\74)
 Will not be liable if:
 Not the source of the information; and
 Disclaims responsibility
THE LAW OF COMMERCIAL CONTRACT
Vicarious Liability
 A corporation is liable for the conduct of its
 Directors
 Employees
 Agents
 Any person who acts at the direction or with
the consent of the corporation
Section 84(2)(b)
THE LAW OF COMMERCIAL CONTRACT
Causation
 Damages only if conduct caused loss
 Futuretronics v Gadzhis
 Sweetman v Bradfield (S&O p58\81)
 No reduction for Contributory Negligence
 I & L Securities v HTW Valuers (S&O p 82 2nd Ed only)
 Will change – Corporate Law Economic Reform Program Bill
 Reliance
 No loss caused by conduct if no reliance on it
 Reliance not required for claims by competitors for false
marketing
 Does not have to be sole cause
THE LAW OF COMMERCIAL CONTRACT
Disclaimers and Exclusion Clauses
 Must be prominent to be effective against claims
for misleading conduct
 Bateman v Slayter (S&O p57\80)
THE LAW OF COMMERCIAL CONTRACT
Remedies
 Damages
 Contract – restore plaintiff to position it would
have been in if contract performed
 Tort – restore plaintiff to position if tort not
committed (i.e. restore plaintiff to pre-contract
condition)
 S 52 – Difference between plaintiff’s present
position and the position it would have been in
but for the misleading conduct
 Can include loss of commercial opportunity
THE LAW OF COMMERCIAL CONTRACT
Remedies
 Damages
 Can be awarded against corporation’s
 Directors
 Employees
 Agents
If they were involved in the conduct
 Injunctions
THE LAW OF COMMERCIAL CONTRACT
Remedies
 Declaration
 Court may declare contract wholly or partly
void (s87 TPA)
 Accounting Systems 2000 v CCH Australia
(S&O p59\84)
 Variation
 Court can vary the terms of the contract
 Mr Figgins v Centrepoint Freeholds (S&O
p60\84)
THE LAW OF COMMERCIAL CONTRACT
Criminal Representations
 S 53 TPA creates criminal offences for certain
false representations
 Services are of a particular standard, quality,
value or grade
 Goods are new
 A particular person has agreed to acquire
goods or services
 Goods or services have sponsorship,
approval, performance characteristics,
accessories, uses or benefits
THE LAW OF COMMERCIAL CONTRACT
Criminal Representations
 S 53 TPA (cont.)
 Sponsorship, approval or affiliation of the
corporation
 Price
 Availability of facilities for the repair of goods
or of spare parts for goods
 Place of origin of goods
THE LAW OF COMMERCIAL CONTRACT
Criminal Representations
 S 53 TPA (cont.)
 The need for any goods or services
 The existence, exclusion or effect of any
condition, warranty, guarantee, right or
remedy
 All are covered by civil provisions of s52 TPA
THE LAW OF COMMERCIAL CONTRACT
Provision
Misleading or deceptive
conduct
Predictions
Injunctions
Damages
TPA
52
ASICA
12DA
VIC
9
51A
80
82
12BB
12GD
12GF
4
149
159
Other remedies
Unconscionable conduct
Unconscionable conduct –
consumers
Unconscionable conduct –
small business
87
51AA
51AB
12GM
12CA
12CB
158
7
8
51AC
12CC
8A & 8B