Important to Analyse and Understand Common Law Misrepresentation

Preceding to Section 52 of the Trade Practices Act 1974 (TPA), misleading and deceptive conduct was an area covered by common law misrepresentation. To fully take account of its legal significance, it is important to analyse and understand common law misrepresentation and its ineffectiveness in protecting against unscrupulous trade practices. In the past, victims of scoundrels could not receive appropriate justice from then laws which had various loopholes and limitations. The situation was made worse as the courts had insufficient powers to pass new laws to remedy such problems, this lead to the eventual enactment of the TPA.

Common law misrepresentation’s main concept revolves around distinguishing things said during negotiations which lead up to a contract. A statement of fact is known as a representation, where a misrepresentation is a statement of fact made that is untrue . This distinction is divided into 2 main categories: simple representation and representations that have become terms. Simply put, simple representations are “mere representations” made which induced the other party to enter into the contract, but do not make up the terms of the contract. A term on the other hand is part of the contract. A misrepresentation is not. Therefore, as misrepresentations are not terms of contract, it does not constitute a breach of contract.

The following statements are generally not considered to be representations:

• Statements of law
• Statements as to future conduct or intention
• Statements of opinion

Where an opinion does not normally give rise to an action in misrepresentation , as highlighted in the case of Bisset v Wilkson [1927] AC 177, where Mr. Bisset wished to purchase Mr. Wilkinson’s land. During negotiations, Mr. Wilkinson stated that the land could carry 2000 sheep, subsequently, it was later found out to be untrue. This led to Mr. Bisset wanting to rescind the contract, claiming misrepresentation. It was held that Mr. Wilkinson merely made a statement of opinion, not qualified by any knowledge of the actual capacity. Both parties knew that the defendant did not use the land for sheep farming before, and therefore there had been no misrepresentation and Mr. Bisset had no grounds to rescind.

• Mere ‘puffing’

The case of Dimmock v Hallett (1866) LR 2 Ch App 21 demonstrates ‘puffing’ statements, where statements made are exaggerated in nature , and are not intended to form part of the contract. Where, Hallett won a bid at an auction for a piece of land, only to later discover that it was not “very fertile and improbable”, as described in the sales particulars. Therefore, he sued on the grounds of misrepresentation. However, the court held that the description was a “mere flourishing description”, and Hallett should not have taken it as a positive representation of fact. Therefore, it can be seen that a mere ‘puff’ or ‘flourishment’ does not give rise to legal rights if or when they prove to be inaccurate .

Comparing Dimmock v Hallet’s case with Smith v Land & House Property Corp. (1885) 28 Ch D 7, the difference being the court held the statement “the whole property is let to Mr. Frederick Fleck (a most desirable tenant)” was more than a puff as it was one of fact. Besides that, Land & House Property Corp. Should have

• Silence

SILENCE IS NOT MISREP. (Buyer beware!)

Vendors owe no duty to consumers – Caveat emptor – let buyer beware – SCOTT FELL & CO v LLOYD,

Compare: DEMAMOGUE PTY v RAMENSKY (1992) – duty to disclose exception to rule on silence (can be exceptions to rule of silence).

The common law of contract envisages two equally powerful negotiating partners, both aware of the caveats subscript (let the signatory beware) and emptor (let the buyer beware), voluntarily taking upon themselves contractual obligations in return for contractual rights. Yet we have various statutorily implied terms which exist to protect consumers in Victoria

By exclusion clause, corporations/vendors – exclude/limit liability for misrep

(Agree in contract that statements made BEFORE cannot be used in court (to sue))

CURTIS v CHEMICAL CLEANING DYEING CO

Remedies – rescission/damages

Must have some kind of fault from one party

Common law misrepresentation is divided into 3 categories:

• Fraudulent misrepresentation

o Where a false statement is made knowing it is false or reckless

o – false statement made knowing it is false or reckless whether it is false:

o In Derry v Peek,

• Negligent misrepresentation

o – fiduciary relationship – breach of duty of care – statement made negligent.: CASE HEDLEY BYRE v HELLER PTNERS, HILL v ROSE (1990) VR

• Innocent misrepresentation

o – statement made in an honest belief to be true.

BODY:

S.52 TPA – misleading or deceptive conduct

* have no rules (very wide)

* Commonwealth legislation. Applies only to corporations

* States enacted FTA to apply to individual traders

* New law makes old law of misrep redundant

* Old law still in use

s.52 – Definition: A corporation shall not_______ deceive (must be in the course of TRADE/COMMERCE)

– Definition of corporation _____

– Trade or commerce _____

CASES:

BEVANERE v LURBIDINEUSE

CONCRETE CONSTRUCTION v NELSON

O’BRIEN v SMOLONGOV – PRIVATE sale of land not trade or commerce

Misleading OR Deceptive

– Includes statements, opinions, information, advertisement (Misrepresentation only includes STATEMENTS, therefore s.52 covers more)

o QDSV Holdings Pty Ltd v Trade Practices Commission (amendment made in Australia to product of Australia)

– As long as conduct was wrong and led to the other party into error

– Objective test – TACO CO OF AUST. V TACO BELL

– Do not have to prove fault or intention – strict liability

o CASE: PARKDALE CUSTOMS v PUXU*, MCWILLIAMS WINE v MCDONALDS

– Confusion* NOT SUFFICIENT, must have conduct capable of causing error

– Deceptive – must prove intention to deceive

– What kind of corporate behaviour is caught by s.52

Likely to mislead or deceive

– Generally used for adverts likely to mislead future statements or images

o CASE: SINGTEL OPTUS v TELESTRA CORP. (2009) FCA 859

Disclaimers – exculsion of liability cases

S.52 CANNOT BE EXCLUDED!! By exclusion clauses (unlike misrepresentation)

* HENJO INVESTMENTS

I.e. Telstra is not held liable for products being defective, or any statements made in the past, etc etc.

(NO COMPANY CAN EXCLUDE THEMSELVES FOR DECEIVING OR MISLEADING ANY PARTY UNDER S.52)

Remedies:

s.80 – Injunction/ S.82 – Damages

S.87 Ancillary remedies

Rescind contract & claim damages

CONCLUSION:

– What is the legal significance

– How s.52 protects consumers, compared to Misrep (common law)

Exceptions under commonwealth, state legislations:

http://www.accc.gov.au/content/index.phtml/itemId/688173#h3_68

W. Seah, ‘Unfulfilled Promissory Contractual Terms And Section 52 Of The Australian Trade Practices Act’, Murdoch University Electronic Journal of Law, Vol. 7 No. 3, September 2000,

http://www.austlii.edu.au/au/journals/MurUEJL/2000/33.html

J.Carvan, W. Dowler and C. Miles, A Guide to Business Law, 14th Edition, 2001, LBC Information Services, Pyrmont, NSW, p.

M. L. Barron and R. J. A. Fletcher, Fundamentals of Business Law, 4th Edition, 2003, McGraw-Hill Australia, Macquarie Park, NSW, p.

A. Gibson and D. Fraser, Business Law, 2003, Pearson Education Australia, Frenchs Forest, NSW, p.

S. Graw, An Introduction to the Law of Contract, 6th Edition, 2008, Thomson Lawbook Co., Pyrmont, NSW, p.

D. Parker and G. Box, Business Law for Business Students, 2008, Thomson Lawbook Co., Pyrmont, NSW, p.

UNUSED POINTS:

Analyze success vs. Failure of cases – why? Does it control co. Behaviour?

The increasing number of businesses along with international and local trading makes it more multifaceted Law protects the general consumer public, makes sure that businesses do not take advantage of consumers.

*PROTECTING CONSUMERS