LAWS104 Study Guide - Final Guide: Australian Consumer Law, Specific Performance, Taco Bell

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VITIATING FACTORS – MISLEADING OR
DECEPTIVE CONDUCT
S18(1) of the ACL: a person must not, in trade or commerce, engage in conduct that is misleading or deceptive
or is likely to mislead to deceive
The meaning of ‘in trade and commerce’
-The ACL does not define the words ‘trade’ or ‘commerce’
-‘demand[s] a very wide meaning be given to it’ (Larmer v Power Machinery)
The meaning of ‘engage in conduct’ – silence
S2(2)(a) of the ACL: a reference to engaging in conduct shall be read as a reference to do or refusing to do any
act (includes silence!)
S2(2)(c) of the ACL: refusing to do any act includes (i) refraining (otherwise than inadvertently) from doing the
act; and (ii) making it shown that the act will not be done
The question of whether silence is misleading is normally answered by asking whether the person alleged to be
misled or deceived had a reasonable expectation of disclosure by the other person or on their behalf (Miller &
Associates Insurance Broking v BMQ Australia Finance)
Fabcot v Port Macquarie-Hastings Council (Sackville AJA) summarises the relevant principles relating to s
42 of the Fair Trading Act 1987 (NSW)
-For conduct to be MoD it is not necessary that it convey an express or implied representation. It is
sufficient that the conduct leads or is likely to lead another party into error
-In a case of alleged MoD conduct as a result of non-disclosure, it is not necessary to show that the
alleged contravenor knew of the facts not disclosed. However, knowledge may be relevant, for
example, where disclosure of a fact would reasonably be expected if the fact were known to the alleged
contravenor
-The question in a case of alleged MoD conduct as a result of non-disclosure is whether in the light of
all relevant circumstances, there has been conduct which is MoD. While the circumstances in which
silence can be characterised as MoD cannot be exclusively defined, unless they give rise to a
reasonable expectation that if some relevant fact exists it will be disclosed, mere silence will not
support the inference that the fact does exist
-In commercial dealings between individual entities, the characterisation of conduct must be undertaken
by reference to circumstances and context. The relevant circumstances include the knowledge of the
person who claims to have been misled and any common assumptions or practices established between
the parties or in the particular activity or business in which they are engaged
-The language of reasonable expectation is not statutory but is an aid to characterising non-disclosure as
MoD. The judgment as to whether there is such a reasonable expectation is objective
-The invocation of a reasonable expectation that if a fact exists it will be disclosed, directs attention to
the effect or likely effect of non-disclosure unmediated by antecedent erroneous assumptions or beliefs,
or high moral expectations that exceed the requirements of the general law or of the prohibition
imposed by s 42 of the Fair Trading Act
-In general, s 42 of the Fair Trading Act does not require a party to commercial negotiations to
volunteer information which will assist the decision-making of the other party. A fortiori, s 42 does not
require a party to volunteer information in order to avoid the careless disregard of its own interests of a
party of equal bargaining power and competence
Henjo Investments v Collins Marrickville Henjo operated a restaurant. The restaurant licence had a
maximum seating capacity for 84 persons. In fact, the restaurant operated with capacity for 128 patrons. Collins
Marrickville contracted to purchase the restaurant, having been informed that the restaurant had a 128 seating
capacity and their solicitor failed to undertake the standard search of the restaurant’s licence that would have
revealed the true situation. After the sale of the restaurant was completed, Collins Marrickville discovered the
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Document Summary

S18(1) of the acl: a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead to deceive. The acl does not define the words trade" or commerce". Demand[s] a very wide meaning be given to it" (larmer v power machinery) The meaning of engage in conduct" silence. S2(2)(a) of the acl: a reference to engaging in conduct shall be read as a reference to do or refusing to do any act (includes silence!) S2(2)(c) of the acl: refusing to do any act includes (i) refraining (otherwise than inadvertently) from doing the act; and (ii) making it shown that the act will not be done. The question of whether silence is misleading is normally answered by asking whether the person alleged to be misled or deceived had a reasonable expectation of disclosure by the other person or on their behalf (miller &

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