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The late American journalist Earl Wilson once warned "If
you wouldn't write it and sign it, don't say it". He
probably didn't have in mind the Australian legal system, but
his simple advice is a useful rule of thumb for Australian
businesses today.
In Australia, there is a statutory prohibition on misleading or
deceptive conduct. This means that if a business engages in conduct
that leads - or has the potential to lead - another person into
error, then it may be liable to those who are misled.
Where a statement is made about a future matter, such as when
new stock will be available or how long a product will last, it
will be taken to be misleading if the maker did not have reasonable
grounds to make such claims.
So it would be problematic if a supplier said to a customer
"we should be able to have that to you by next Friday",
if the supplier knew it was out of the stock, and didn't have
new stock on order that would arrive in time to meet that
timing.
However, it would be reasonable if new stock was scheduled to
arrive by next Friday, but ultimately didn't due to some
unforseen circumstance.
This is a very powerful stick which can be used to keep
businesses honest. Given this role, courts have not allowed
businesses to use contractual exclusion clauses to escape
liability.
The Australian Competition and Consumer Commission has actively
policed public representations, recently exposing La Ionica's
"free to roam/no cages" ads as misleading – the
company's stock was kept in densities that kept them from
roaming. But you don't need to be making public statements to
fall under the rule. Any statement made in carrying on business -
or sometimes, even not speaking up to correct a misleading
impression - could give rise to liability.
For example, calling a piece of equipment "the latest
model" would be misleading or deceptive if it has been
superseded - even if the person making the statement didn't
know that. In contrast, saying "as far as I know it's the
latest model" would only be misleading or deceptive if the
maker of the statement in fact knew of the existence of a later
version.
Where you are not entirely sure about the correctness of a
statement, it should be carefully qualified. The key question is:
are you happy to stand behind that statement? If the answer is no,
then don't write it, don't sign it and don't say
it.
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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