Misleading and Deceptive Conduct - what not to do!

Engaging in misleading and deceptive conduct can lead to serious consequences for your reputation and your business. Special Counsel Caroline Callegari explains.

Engaging in misleading and deceptive conduct can give rise to serious consequences in a number of different contexts.  The main consequences of engaging in such conduct is that a contract you entered into could be found to be void and you could have to pay damages to the other party for loss and damage caused by the misleading and deceptive conduct.  

The non-monetary consequences can also be very serious, such as significant damage to your business or personal reputation and/or loss of your business.

Common areas where misleading and deceptive conduct can get you into trouble include:  

  1. During contractual negotiations;
  2. During the sale of real property;
  3. Dealing with consumers of your products or services; and
  4. In the relation to Intellectual Property.

We have provided below some examples of the types of conduct that can get you into trouble in these areas.These are a useful guide to assist you to know ‘what not to do’ in your  dealings with other businesses, government agencies and consumers, and so as to help you avoid engaging in misleading and deceptive conduct.

They are also examples of conduct that you might be subjected to in the course of your business operations that could give rise to you having a claim against another party, such as a supplier of goods or services to your business.

Contract Negotiations

Contracts are essential in the business world. And it is rare for a contractual agreement to be reached without the parties having undergone a negotiation period.

Examples of conduct that could get you into trouble during contract negotiations include:

  • Deliberately withholding important information        
  • Making a statement that fails to disclose important information
  • Conveying a false impression about something to do with the business
  • Providing incorrect information during the due diligence phase
  • Not correcting the other party when you know they have made a false assumption
  • Making a statement about a future state of affairs where you have no reasonable basis for making that statement

Property Transactions

When selling real estate, vendors should be mindful of acting honestly and in good faith regarding the condition of the property and knowledge of any current or future activities a prospective buyer would be interested to know about.

Situations where you could get into trouble include:

  • Failing to answer any question about the structural soundness or quality of the property honestly and completely
  • Not disclosing something material to a purchaser that might impact their intended use of the land, where the vendor knows what their intended use is going to be. For example, not disclosing that hazardous material has previously been used onsite or you have knowledge of an upcoming development nearby that will impact the use
  • Withholding reports the vendor has obtained about the property – for example, a report which discloses the risk of termite infestation
  • Not disclosing building work or other work done without a required building permit, planning permit or that is otherwise illegal or leading someone to believe it was done with the required permit when you know it was not
  • Being on notice of a future development near the site

Dealing with Consumers

If you operate own or operate a business that deals with consumers, some points to be aware of that may get you into trouble are:

  • Representing a product or service does something it does not
  • Advertising a product or service you do not supply to get people in the door to buy an alternative product
  • Failing to tell a consumer that the product they are buying is incompatible with other products they own, when you know they are looking for a compatible product
  • Not disclosing key conditions on offers
  • Making a health or other scientific claim about your product with no scientific backing

Trademarks, Brand associations, and Copying

A business brand and trademarks are important elements that distinguish one business from another. Brands and trademarks, therefore, have value as a measure of consumer engagement, which can ultimately provide a competitive advantage.

The law impose penalties on businesses that attempt to mislead or deceive by misappropriating the intellectual property of another business.

These situations can include:

  • Using a trade mark that is deceptively similar to another trade mark
  • Deliberately naming a business similar to another business to try and lure their customers to you
  • Representing you have an association with a major brand when you do not
  • Making your website look like another company’s website to lure customers to your site. For example, by using the same colour schemes, design or fonts.

How Sharrock Pitman Legal can help?

If you are accused of engaging in misleading or deceptive conduct, or believe another business is operating in a manner that could mislead or deceive the public and, as a result, your business has been  effected, please contact our Disputes & Litigation team on 1300 205 506 or email litigation@sharrockpitman.com.au.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

 Liability limited by a scheme approved under Professional Standards Legislation.

For further information contact  
Caroline Callegari

Caroline Callegari is an Associate Principal and leads our Disputes & Litigation team. She has an advisory and advocacy practice in the following areas: Commercial Litigation, corporate and personal disputes, debt recovery and, insolvency and bankruptcy matters. Caroline can be contacted on (03) 8561 3324.

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