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Reliance On Misleading And Deceptive Conduct

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Question:

Discuss about the Reliance on Misleading and Deceptive Conduct.
 
 

Answer:

Introduction:

The Australian Consumer Law or the ACL is a substantial legislation for the protection of consumers in Australia, along with making certain that the businesses trade in a fair manner. Schedule 2 of the Competition and Consumer Act 2010 (CCA) contains the provisions regarding ACL (Coorey, 2015). The CCA provides the protection to the consumers from unfair contractual terms, unconscionable conduct, false representations, misleading and deceptive conduct, and various other unfair practices, which relate to the supply of goods and services, and even land (Corones, 2012).

Section 3 of the ACL contains the definition of a consumer. As per this section of the ACL, an individual, who acquires goods or services, the amount of which does not exceed $40,000, or such a higher amount, which has been prescribed is a consumer, provided the goods or services have been acquired ordinarily for personal, household or domestic consumption or use (Australasian Legal Information Institute, 2017).

Section 18 of the ACL provides the restriction on individuals from engaging in such conduct, during the course of trade or commerce, which can be stated as being deceptive or misleading (Kolivos and Kuperman, 2012). This conduct is considered as being an unfair business practice as per the CCA. Section 18 can be used by the people who have been induced or persuaded by some other party to enter into the contract, as a result of the misrepresentations which were made when the negotiations took place, and which ultimately led to the formation of the contract. When such an incident occurs, the aggrieved party can apply for the requisite relief due to the deceptive or misleading conduct arising from the misrepresentation made (Federal Register of Legislation, 2013).

In the matter of Australian Competition and Consumer Commission v Internet Pty Ltd (2013) FCAFC 37, certain advertisement was given by TPA in the newspaper. The court held that these advertisements were not only misleading, but deceptive as well, due to the single price which was displayed in the advertisements for the services undertaken by the individuals. The reality was very different from these advertisements, as for these services, the individuals were required to pay a number of other costs, which were deliberately withheld in the advertisement by TPA. Upon the matter being presented before the court, the ruling was given in favor of the Australian Competition and Consumer Commission and it was held that the provisions of ACL were breached by TPA, as it engaged in misleading and deceptive conduct (High Court of Australia, 2013).

In De Bortoli Wines Pty Ltd v HIH Insurance Ltd (in liquidation) & Others [2012] FCAFC 28, it was held by the court that reliance had to be established on the misleading or deceptive conduct of the defendant, so that the provisions of the Trade Practices Act 1974 could be contravened. The Trade Practices Act 1974 is the former act of the ACL. Once the reliance is established, the court can award the required remedies to the plaintiff (Czoch and Whalebelly, 2012).  

As per section 29(1)(i) of this ACL, the individuals are considered to be involved in the unfair practices, where such individuals, during the course of trade or commerce, engage in the supply of goods or services and for promoting their goods or services, a false or misleading representation is made by the individuals in relation to the value, price, need, grade, standard or one of the other aspects of the services or products offered (Federal Register of Legislation, 2013).

In Australian Competition and Consumer Commission v Jetstar Airways Pty Ltd [2015] FCA 1263, it was held by the court that there was a failure on part of Virgin and Jetstar, and that too deliberate, regarding the disclosers made pertaining to the additional Booking and Service Fee. Moreover, these particular disclosures relating to the fee were made, only when the consumer had crossed a certain number of stages under the booking process. Due to these reasons, both Virgin and Jetstar were held too have breached the act as they made false or misleading representation, due to their engagement in the misleading dip pricing practice (Jade, 2015).

Exclusion clauses are the clauses, which are inserted in the contract and which have the capability of limiting the liability of the party including the same in the contract. For the exclusion clause to have legal validity, the same has to be incorporated in the contract in a proper manner. In addition to this, an exclusion clause cannot limit the applicability or contradict any law. It is crucial that the exclusion clause is brought to the notice of the party against which the same is being inserted (Roach, 2016). L'Estrange v Graucob [1934] 2 KB 394 contained the ruling that it was irrelevant if the individual had read the exclusion clause or not, if the same has been signed, the same is applicable on the parties (Swarb, 2017).

In Chapelton v Barry UDC (1940) 1 KB 532, the back of the ticket contained the exclusion clause and the same was not brought to the attention of the plaintiff. Due to these reasons, the same was held as being invalid (E-Law Resources, 2017a). In Thornton v Shoe Lane Parking Ltd (1971) 2 WLR 585, a similar ruling was given. In this case also, for the reasons of the exclusion clause being at the backside of the ticket, it was held to be invalid (E-Law Resources, 2017b). The exclusion clause has to be stated at the same place only, and cannot be referred to some other place, as was established in Thompson v London Midland & Scottish Railway (1930) 1 KB 41 (E-Law Resources, 2017c).

The ruling given in L'Estrange v Graucob  has an exception. In case the signing part of the contract has been misrepresented or has been mislead regarding the terms of or the effects of the contract, the rule given in L'Estrange v Graucob does not apply.

 

Application

In Curtis v Chemical Cleaning and Dyeing Co [1951] 1 KB 805, when the claimant gave her dress to the cleaners, she was requested to sign a form. Upon enquiring about the same, she was told by the assistant that the form excluded the cleaner’s liability in case the beads are damaged. However, this exclusion clause limited the liability of the cleaner from all the damages. When the dress was returned as badly stained, the plaintiff sued the cleaner. In this case, it was held that due to the misrepresentation by the assistant, the cleaner could not rely upon the exclusion clause (Swarb, 2015).

In the given case study, Brent paid a total sum of $12,000 for him and his wife for booking the tour. This amount is within the limits given in the ACL for a consumer, and so, as per ACL, Brent and his wife were consumers.

When Brent was booking the tour, he came across the live chat, where he clearly stated his and his wife’s condition and preferences, and only after the assurances were made regarding the same, did he book the tour. He was explicitly told that the river part of the tour was a leisurely 8-hour cruise down a river in Canada, which would suit him and his wife, particular because his wife would not swim. When the tour was started, on 9th day, they came across the river cruise, which required him to ride rafts, which was not mentioned in the itinerary. And there he was told that they would have to ride the rafts as it was the only way.

This statement was different from the one made when booking the tour and hence, the same can be deemed as misleading and deceptive conduct, in addition to the same being false representation. It was falsely told to Brent that the ride would be cruise, when in reality it was rafts, which mislead him into entering the tour. As per Australian Competition and Consumer Commission v Internet Pty Ltd, the information regarding the use of rafts was deliberately withheld by Rocky Tours and so, Brent was misled. And as per Australian Competition and Consumer Commission v Jetstar Airways Pty Ltd, Brent came to know about the rafts only after he had reached the 9th day of the tour. Hence, both section of ACL, i.e., 18 and 29(1)(i) were beached and this action would be deemed as unfair trading on part of Rocky Tours.

Moreover, the exclusion clause would not safeguard Rocky Tours due to the misrepresentation made in it, as per Curtis v Chemical Cleaning and Dyeing Co. Even if this misrepresentation was not made, the exclusion clause would have been invalid, as the same restricted the liability of Australian Consumer Law on them, even when they provided services to the consumers.

Conclusion

To conclude, the applicability of the Australian Consumer Law on this case has given Brent, the rights of a consumer. And the actions undertaken by Rocky Tours have breached the leading sections of the ACL. Also, Rocky Tours cannot be safeguarded by the exclusion clause and so, would be liable for the losses incurred by Brent.

 

References

Australasian Legal Information Institute. (2017) Competition And Consumer Act 2010 - Schedule 2. [Online] Australasian Legal Information Institute. Available from: https://www.austlii.edu.au/au/legis/cth/consol_act/caca2010265/sch2.html [Accessed on: 23/04/17]

Coorey, A. (2015) Australian Consumer Law. London, United Kingdom: LexisNexis Butterworths.

Corones, S.G. (2012) The Australian Consumer Law. New South Wales: Lawbook Company.

Czoch, K., and Whalebelly, R. (2012) Australia: D&O: Shareholder reliance on misleading and deceptive conduct. [Online] Mondaq. Available from: https://www.mondaq.com/australia/x/182340/Arbitration+Dispute+Resolution/DO+Shareholder+reliance+on+misleading+and+deceptive+conduct [Accessed on: 23/04/17]

E-Law Resources. (2017a) Chapelton v Barry UDC [1940] 1 KB 532. [Online] E-Law Resources. Available from: https://www.e-lawresources.co.uk/cases/Chapelton-v-Barry.php [Accessed on: 23/04/17]

E-Law Resources. (2017b) Thornton v Shoe Lane Parking [1971] 2 WLR 585 Court of Appeal. [Online] E-Law Resources. Available from: https://www.e-lawresources.co.uk/Thornton-v-Shoe-Lane-Parking.php [Accessed on: 23/04/17]

E-Law Resources. (2017c) Thompson v London, Midland and Scotland Railway Co [1930] 1 KB 41 Court of Appeal. [Online] E-Law Resources. Available from: https://e-lawresources.co.uk/Thompson-v-London%2C-Midland-and-Scotland-Railway-Co.php [Accessed on: 23/04/17]

Federal Register of Legislation. (2013) Competition and Consumer Act 2010. [Online] Australian Government. Available from: https://www.legislation.gov.au/Details/C2013C00620/Html/Volume_3#_Toc368657533 [Accessed on: 23/04/17]

High Court of Australia. (2013) Australian Competition and Consumer Commission V TPG Internet Pty Ltd (M98/2013). [Online] High Court of Australia. Available from: https://www.hcourt.gov.au/assets/cases/m98-2013/M98-2013.pdf [Accessed on: 23/04/17]

Jade. (2015) Australian Competition and Consumer Commission v Jetstar Airways Pty Limited [2015] FCA 1263; (2016) ATPR 42-523. [Online] Jade. Available from: https://jade.io/j/?a=outline&id=418609 [Accessed on: 23/04/17]

Kolivos, E., and Kuperman, A. (2012) Consumer law: Web of lies-legal implications of astroturfing. Keeping good companies, 64(1), p. 38.

Roach, L. (2016) Card and James' Business Law. 4th ed. Oxford: Oxford University Press.

Swarb. (2015) Curtis v Chemical Cleaning and Dyeing Co: CA 1951. [Online] Swarb. Available from: https://swarb.co.uk/curtis-v-chemical-cleaning-and-dyeing-co-ca-1951/ [Accessed on: 23/04/17]

Swarb. (2017) L’Estrange v F Graucob Limited: CA 1934. [Online] Swarb. Available from: https://swarb.co.uk/lestrange-v-f-graucob-limited-ca-1934/ [Accessed on: 23/04/17]

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