HI6027 Week 7 – Consumer ProtectionSample question and answerSunnybank Pty Ltd sold a restaurant to John Gravatt. When Gravatt inspected the restaurantbefore entering into the contract, he counted 12 tables each with four chairs inside therestaurant and six tables each with two chairs situated on the footpath outside. Sunnybank PtyLtd didn’t tell Gravatt that the tables and chairs on the footpath hadn’t been approved by thelocal council. Gravatt has now been told by the local council that the tables and chairs on thefootpath must be removed.Advise John Gravatt on the legal issues raised by this situation.This question raises the issue of misleading or deceptive conduct. Section 18 of the ACL restatesthe former s 52 of the Trade Practices Act 1974 (Cth). It is a catch-all provision that provides that aperson shall not engage in conduct that is misleading or deceptive or is likely to mislead ordeceive.Because of the difficulty in satisfactorily defining conduct that is misleading or deceptive, thesection has a wide application. As a result, s 18 has become the most litigated section of the ACL.Section 18 is made up of three elements:• conduct by a person;• the activity of trade or commerce; and• misleading or deceptive conduct, or conduct likely to mislead or deceive.If these three elements are satisfied, any person or business can bring an action against aperson involved in conduct that is misleading or deceptive or likely to mislead or deceive.Conduct means doing or refusing to do any act and has been given a wide meaning under theACL. It not only catches positive statements by sellers of goods or services, but it can also catch:• statements of opinion that imply false representations of fact or are not reasonably held;• puffs—for example, exaggerated advertisements—if they are likely to mislead or deceive;• broken promises and false predictions;• statements that are literally true but that create a false impression;• pre-contractual statements, leading up to the entering into a contract, which were false;and• silence, if it likely to mislead or deceive.The facts of this case are similar to Henjo Investments Pty Ltd & Ors v Collins Marrickville Pty Ltd(1988). In that case, the court held that silence can constitute misleading and deceptive conductwhen the circumstances give rise to disclosing relevant facts. This duty to disclose is not negatedmerely because enquiries that would have disclosed the true position could have been made.
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