Misleading or deceptive conduct
The statutory prohibition that has largely displaced misrepresentation in Australian commercial practice: no fault required, cannot be excluded, and remedies are discretionary.
Learning outcomes
- Apply the elements of the statutory prohibition.
- Explain when silence contravenes.
- Apply the reversed burden for statements about future matters.
Australian consumer legislation prohibits a person, in trade or commerce, from engaging in conduct that is misleading or deceptive or likely to mislead or deceive. In commercial practice this provision has largely displaced misrepresentation, and for good reasons: it requires no proof of intention or negligence, it cannot be contracted out of, and the remedies are broad and discretionary.
The elements
- Conduct, which includes statements, silence in some circumstances, promises, predictions and conduct as a whole. Half-truths and impressions matter, not just literal falsity.
- In trade or commerce — a genuine limit. Purely private transactions and some internal or non-commercial dealings fall outside.
- Misleading or deceptive, or likely to mislead or deceive — assessed objectively, by reference to the effect on the relevant class of persons. Actual deception need not be proved.
Silence
Silence can contravene where, in the circumstances, there is a reasonable expectation of disclosure. That is a contextual judgement rather than a general duty to speak. The reverse is also true: a clear, prominent disclaimer can prevent conduct from being misleading in the first place. In Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592,1 a real estate agent's brochure reproducing a survey diagram, with a clear disclaimer as to its accuracy, was held not misleading — a reasonable recipient would understand the disclaimer as passing the risk of inaccuracy to the purchaser.
Opinions and predictions
A statement about a future matter is taken to be misleading unless the maker had reasonable grounds for making it, and the maker bears the burden on that question. This reverses the usual position and is why forecasts and projections are a frequent source of liability.
Disclaimers
Disclaimers and entire agreement clauses do not automatically save conduct that is otherwise misleading; the question remains what the conduct as a whole conveyed. Clear and prominent qualification can affect that assessment, but it is not a shield.
Causation and remedies
A claimant must show loss because of the conduct. Remedies include damages, and a wide discretion to make orders varying, avoiding or refusing to enforce a contract, and to order refunds or restitution. The court may apportion for contributory conduct in some circumstances.
The flexibility of the remedial power is a practical advantage over rescission at general law, which is all-or-nothing and subject to strict bars.
Related prohibitions
The same legislation prohibits specific conduct — false or misleading representations about goods or services, unconscionable conduct, and unfair contract terms in standard-form contracts — and these are frequently pleaded together.
Applying this in a problem question
- Identify the conduct and confirm it was in trade or commerce.
- Assess objectively what it conveyed to the relevant audience.
- For forward-looking statements, put the reasonable-grounds burden on the maker.
- Address any disclaimer as part of the overall impression, not as an answer.
- Establish causation and select from the broad remedial menu.
- Plead general law misrepresentation in the alternative.
Where the authority sits
Commonwealth statute, applied by an extensive body of Federal Court and High Court authority. Cite the Act and section, and note that the provision has counterparts applying to financial services.