Week 3 - InClass Slides.pptx

8/18/2019 Week 3 - InClass Slides.pptx

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Business Law

BTF11010

Semester 1, 2016Non-Contractual

Risks and Oli!ations

Seminar ", week "

#r$ %erstin Steiner


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Structure of the Seminar

General Matters

Seminar Content: Statements & Behaviour:

Negligent Misrepresentation and Misleading and Deceptive ConductA. Overvie of lia!ilities for statements

B. Australian Consumer "a #hereafter called AC"$

C. %ort

Summar


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General Matters


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Material

Moodle: location for everthing'

(o to Stud: Stud Approach section ith details on online tas)s

*hat to stud: +nit Content section ith details of ee)l activities

*ritten material

+nit Guide: short overvie

Student Activit Guide:

(o to stud: detailed instructions and e,planations including the

online activities *hat to stud: overvie of topics- o!ectives- readings- cases &

legislation- e,ercises for the seminar and tutorials


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%ips for succeeding%he /perfect0 expandable stud organisation

Pre-class activities 1ead the te,t!oo)

Do the studplan e,ercise in MBus"a"a!

2repare the in3class activities

In-class activities Attend and participate

Post-class activities Organise our notes- as) 4uestion in consultation times

Chec) understanding ith the homeor) in MBus"a"a! (ave fun5

6.

Assessment post-class activities

*ee)l online test in MBus"a"a!

2repare ansers to 4uestions and chec) in consultation times


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2ractice: *ee)l Online 7ui8

1 2 3 4 5 6 7 8 9 10

0

20

40

60

80

100

120

140

160

Total numer o& attem'ts( )*"


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Statements & Behaviour:

Negligent Misrepresentation andMisleading and Deceptive Conduct


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%opic O!ectives

On completion of this topic- ou should !e a!le to:

Descri!e the la of torts- its general principles and the statutes of limitations for tort actions9

"ist and e,plain the necessar elements re4uired to esta!lish negligent misstatement and

appl them to a practical situation9

dentif the defences a defendant can raise in an action for negligence- and their potential

impact on damages paid9

;,plain negligence and the introduction of civil lia!ilit legislation ! federal- state and

territor governments9

;,plain the elements of misleading and deceptive conduct and appl them to a practical

situation9 and

;,plain the distinction !eteen common la and statute la- using the lia!ilit for

statements as an e,ample.

C h e c k l i s t


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Scenario: %he )noledgea!le Archie

Archi 2t "td is a compan hich provides architectural services and advice.

B letter Archi advised


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"egal 1is)s for Advice Giver

Incorrect Advice

Statute

S 18 ACL,Seminar 3,

Chapter 3 !

S 12 "A #1$ ASICand

Corporation% Act2001 #C&th$

Seminar 10

Common La'

"eceit( )raud*ot covered in

the %u+ect

*e-.i-ent/i%repre%entatio

nSeminar 3,

Chapter 3 !

Contract reach o a term

Seminar% 6, 8

Chapter% 6, 7,9and 9 !


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Australian Consumer "a


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Misleading or Deceptive Conduct

AC" s >@ provides:

A person shall not- in trade or commerce- engage in conduct that is misleading

or deceptive or is li)el to mislead or deceive.

Section >@ AC" focuses on the NA%+1; O %(; 1;21;S;N%A%ON- NO%

%(; CONDC+% O %(; 1;21;S;N%O1.

%herefore it is not necessar to prove fraud or negligence

Gi!!s C in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd #>E@F$

A%21 ?3H?I Yorke v Ross Lucas Pty Ltd #>E@H$ A%21 ? 3?> #ederal Court$


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"egal 1is) under s >@ AC"

>. Step

• Applica!ilit• A person• n trade or

commerce

F. Step

• Breach• Misleading or deceptive

or li)el to do so• Conduct• (alf truths• Opinions- usuall not

covered e,cept for • "ies• ;,pert opinion as

statement of fact• f totall

unsupported ! thefacts.

H. Step

• Damages• Causation

. Step

• Defences• ;,clusion

clauses anddisclaimers• Not ver

effective- see Bateman v

Slatyer#>E@I$ A%21?3IJF#ederalCourt$

Disclaimer as usual


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>. Step: Applica!ilit

A trader hose conduct- o!ectivel determined- is misleading ill

contravene s >@- hether or not he or she has acted honestl andKor

reasona!l: ;4uit Access.

t is necessar to prove a causal connection !eteen the claimed loss

or damage and the conduct complained of.

But it is not necessar that the claimant !e misled.

t ma !e- for e,ample- that a trader has suffered loss of !usiness !ecause his or her customers have !een misled ! a competitor0s

misleading advertising.


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F. Step: Le %erm

Conduct

%he use of another trader0s distinctive ords or products- features and slogans9

Similar !usiness names #Taco Bell of Australia Inc v Taco Bell Pty Ltd .$9

Comparative advertising hen comparisons !eteen products are claimed not to !e accurate# Eveready Australia Pty Ltd v illette Australia Pty Ltd F??? A%21 >3I>$9

Defamator comments9

Misleading conduct in emploment9

Character merchandising9

Silence- here there is an o!ligation to disclose # !en"o Investments Pty Ltd # $rs v Collins %arrickville Pty Ltd #>E@@$ IE A"1 @$.

%he plaintiff is assisted ! s AC" hich provides that a representation as to a future mattershall !e ta)en to !e misleading if the author did not have reasona!le grounds for ma)ing therepresentation.


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F. Step: Le %erm

Misleading or Deceptive

Conduct that ma result in confusion in the mind of consumers is notsufficient to esta!lish a !reach of s >@ AC": see %c&onald's System of

Australia Pty Ltd v %c(illiams (ines Pty Ltd #>E@?$ HH A"1 HE case.

*hether conduct is misleading or is li)el to mislead or deceive is ano!ective 4uestion to !e determined ! the court.

;vidence as to persons in the target class having !een misled ill !e persuasive !ut not determinative.

Need a /real or remote chance or possi!ilit0 of possi!le victims !eingmisled.

NB: ntention is not an element of the contravention.


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Activit: *or)ing ith Cases

Taco Com)any of Australia v Taco Bell Pty Ltd #>E@F$ A%21 ?3H?H

n >E@>- %aco Bell of Australia 2t "td- a su!sidiar of a +nited States

chain of Me,ican restaurants- opened a Me,ican food restaurant called

P%aco BellP at Bondi in Sdne. Both companies complained of the use of

the name of the other.

(as there !een an infringement of the AC" and- if so- hich sectionKs

and ! hom5 + l e a s e n o t e t a t w e n

t e c a s e w a s o r i ! i n a l l -

d e c i d e d , t e . C L w a s

n o t i n & o r c e , i n s t e a d i t

w a s i t s ' r e d e c e s s o r , t e

T + . t a t w a s

c o n s i d e r e d $


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Solution

Taco Com)any of Australia v Taco Bell

Pty Ltdssue: Breach of s >@ AC" ! %aco Bell of Australia 2t "td5

>. Applica!ilit

person

in trade or commerce

F. Breach

conduct that is misleading5

%he court set don four guidelines in relation to hether the conduct complained of is li)el to mislead ordeceive.

>. t is necessar to identif the relevant section of the pu!lic ho might !e li)el to !e misled.F. F. Once the relevant section of the pu!lic has !een identified- the matter is to !e considered ! reference to

all those ho come ithin it.

H. ;vidence that some have !een misled or deceived is admissi!le and ma !e persuasive- !ut it does notitself conclusivel esta!lish that conduct is misleading or deceptive or li)el to mislead or deceive.

. t is necessar to in4uire h proven misconception has arisen !ecause it is onl ! this investigation thatthe evidence of those ho are shon to have !een misled can !e evaluated and it can !e determined

hether the are confused !ecause of misleading or deceptive conduct on the part of the defendant.

% h i s a n s e r i s l e f t i n o n p u r p o s e t o s h o & o u

h o t o s o l v e t h e s e p r o ! l e m s '


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Solution continued6

Court0s decision

P%aco BellP had !ecome associated ith the Bondi restaurant some considera!le time !efore the+nited States %aco Compan commenced operations in Sdne under the same name.

H. Damages

Causation

%he cause of an actual or li)el misconception as the use of the name ! the +nited Statescompan hich had come after the Bondi restaurant had esta!lished its reputation throughoutSdne and accordingl should !e restrained

As long as the Cronulla P%aco BellP can esta!lish that it has ac4uired a reputation throughoutSdne for Me,ican food in that name- an later competitor ho ished to use the same nameis li)el to cause actual or li)el misconception and could !e met ith an action under s. F.


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mportant 2oints

Mere confusion does not amount to conduct that is misleading or deceptive: %c(illiams(ines Pty Ltd v %c&onald*s System of Australia

;ven if a product has a close resem!lance to the product of another manufacturer to the

point here the consumer ould !e li)el to !e misled- if the product is properl

la!elled ith the name of its on manufacture- there generall ill not !e a !reach:

Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd

%he operation of s >@ is not limited to transactions involving consumers.

Much of the litigation involves traders attac)ing each other0s advertising or other

representations- i.e. Eveready Australia Pty Ltd v illette Australia Pty Ltd #F???$

+nfair trading ill not !e caught as such: it must involve some element of misleading

conduct.

%his ill onl occur if the conduct contains or conves a misrepresentation: see Taco

Bell of Australia Inc v Taco Bell Pty Ltd .


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%ort of Negligence


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&ono+,ue v Stevenson

and Negligent Misrepresentation6.

(ouse of "ords #(o"$ decided a person could !e lia!le for

negligence even though no contract

(o" set out the elements of negligence action:

Dut of care

Standard of care

Causation & 1emoteness tests

But &ono+,ue v Stevenson concerned ith negligentl

manufactured goods- not ords

ssue: Could a person oe a dut of care hen giving advice or

information5


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Definition:

Negligent Misrepresentation

A statement of fact- advice or opinion made in !usiness that is relied upon !

another !ut hich is inaccurate or misleading.


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(istorical Detour


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Development of the Common "a

Candler v Crane- C,ristmas # Co >E> F LB >J

!edley Byrne # Co Ltd v !eller and Partners Ltd >EJ AC J

%LC Assurance Co Ltd v Evatt #>EJ@$ >FF C"1 J


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;arl Decisions

Candler v Crane C,ristmas # C$ >E> ;nglish Court of Appeal

acts

CC & Co as a firm of accountants

CC prepared accounts for %( Mines "td

CC )ne accounts ere to induce Candler to invest in %(

Candler invested !ut lost hen %( ent !ro)e.

CC had !een /e,tremel0 careless 3 !ut NO% dishonest

Candler sued CC for damages for negligence

Decision

As4uith & Cohen " 3 the maorit 3 held that:

Donoghue v Stevenson did not appl to negligent advice

Damages onl in /fraud0 case- folloing Derr v 2ee) as there as no evidence ofdishonest- no lia!ilit for deceit

Denning " 3 dissenting 3 held that:

Donoghue v Stevenson applied

Candler as entitled to damages


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Case:

!edley Byrne # Co v !eller # Partners >EJ AC J

acts (edle Brne as an advertising agenc.

(eller as a !an).

;asipoer #/;0$ as a customer of the !an). Before ta)ing or) from ;- (B as)ed Ban) for reference.

1eference as good and mar)ed:

/Confidential. or private use & ithout responsi!ilit on part of !an)0

;asipoer ent !ro)e oing (B mone

(B sued Ban) for damages for giving negligent advice


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D;CSON:

!edley Byrne # Co v !eller # Partners

(ouse of "ords held:

2erson could !e lia!le for giving negligent advice or information if

the oed a dut of care to the plaintiff not to !e negligent.

(oever- on the facts- Ban) not lia!le !ecause of disclaimer

Side ssue: *e ill loo) at disclaimers later on hen e are tal)ing

a!out contract'


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Disclaimers

/Confidential: or our private use and ithout responsi!ilit on the

part of


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Case:

%LC Assurance Co v Evatt #>EJ@$ >FF C"1 J acts

M"C Assurance "td and 2almer "td ere !oth su!sidiaries of M"C "td

;vatt held polic ith M"C Assurance.

; sought advice from M"C Assurance regarding financial sta!ilit of2almer

M"C Assurance said 2almer sta!le & safe investment

; invested in 2almer

2almer insolvent & ; lost investment Q interest

; sued M"C Assurance for damages for giving negligent advice.


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D;CSON:

%LC Assurance Co v Evatt

%he (igh Court 3 #>EJ@$ >FF C"1 J R held that the defendant as

lia!le for their negligent misstatement.

Dut e,tended not onl to professional advisors !ut also to persons ho

give advice in /serious circumstances0 as per Baric) C

%he (igh Court0s decision as overturned hen the case as

appealed to the 2riv Council.


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Case:

S,addock # Assocs. v Parramata City Council #>E@>$ (G(CO+1% O A+S%1A"A

Shaddoc) land developer

S as)ed 2CC if an road3idening

proposals for land

2CC said no & S !ought land

"ater 2CC compulsoril ac4uired >KH

of land for road3idening.

S sued for damages for

negligent misrepresentation


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Decision: Shaddoc)

>. (edle Brne is clearl adopted as la in Australia.

F. *hen is dut of care oed5

*henever a person gives advice or info.9

to another on a serious matter9

heKshe realises or ought to realise that the other person ill act on it9

it is reasona!le for the other person to so act on it9 and

heKshe oes a dut to e,ercise reasona!le care hen giving the advice or

information.


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;nd of (istorical Detour


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1oadmap: Overvie

"ia!ilit under Common "a

1 Step

•Dut of Care•Advice given inserious manner •Advice giver should

realise trust and thatadvice ill !e actedupon•1easona!le that theother person ill actupon it•2ossi!le limitationsas per s@#>$ *rongsAct•1is) forseea!le•

1is) notinsignificant•1easona!le personould have ta)en precautions

2 Step

•Breach Standard of Care•2ro!a!ilit•2ractica!ilit•Gravit•ustifia!ilit

•2ossi!le limitations as pers @#F$ *rongs Act•Dut to arn of ris)- s?

•1easona!le personould have ta)en

precautions- s @ #F$•Standard of care for professionals•Other principles#alternative !ehaviour-change of !ehaviour$- sE

3 Step

•Damages•Causation•remoteness

4 "eence%

•Contri!utornegligence•Toluntar ris)assumption

Disclaimer: %his is one of m so called 1OADMA2S R no the are not giving ou an anser to a legal pro!lem 6

%he provide ou ith a structure on ho to anser a legal 4uestion

M2O1%AN%: %he are also sometimes incomplete- no- for instance- the are missing case studies. %his means UO+ have to complete it6


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>. Step: Dut of Care

*hen is it oed5

Dut on the defendant to avoid ma)ing careless statements hich cause harm. !edley Byrne v !eller #>EJ$ esta!lished that the la ill impl a dut of carein the ma)ing of statements.

A dut of care e,tends not onl to professional advisers !ut also to persons ho provide information: %LC v Evatt #>EJ@$

%his dut of care also e,tends to advice that is given in /serious circumstances0:S,addock v Parramatta City Council #>E@>$

A dut of care also arises and e,ists here there is a /special relationship0

!eteen the parties: San Se/astian v %inister Res)onsi/le for Administerin+ Plannin+ and Assessment Act #>E@J$


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Special 1elationship

>. Spea)er must !e aare that heK she is !eing trusted ! the

representee to give informationKadvice hich the representee

!elieves the spea)er to possess or to have access to9

F. %he su!ect matter of the informationK advice must !e of a serious

or !usiness nature.

H. %he spea)er must realise that the representee intended to act on the

advice.

. n the circumstances- it must !e reasona!le for the representee to

rel on the spea)er0s informationKadvice.


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n 2ractice: Hrd 2art6 Auditors

Accounting firm #ABC$ acted as auditors for < Compan.

After auditing < in F??J- ABC certified


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%pes of 1elationship

Advi%or

epre%entee

Auditor

Compan

Shareho.der

anerotentia.inve%tor%

Creditor%

Simple #direct$ relationship Auditor


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Case: Esanda Finance Cor)oration #>EEI$ >@@ C"1 F>

2M( as the auditor for a compan called ;,cel.

As auditors- 2M( certified the accounts of ;,cel for the ear ending

une >E@E.

;sanda made loans to a num!er of companies associated ith ;,cel.

As securit for the repament of those loans- ;sanda accepted

guarantees from ;,cel.

;sanda claimed that its decision ma)e loans as in part due to its

reliance on the audited accounts of ;,cel.


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Decision: Esanda Finance Cor)oration

No suggestion that the audit had !een done especiall for ;sanda.

;sanda sued 2M(.

2M( claimed that it oed no dut of care to ;sanda.

(eld: 2M( oed no dut of care to ;sanda.

+ltimatel- this seemed to !e due to the reasona!leness of the

plaintiff0s reliance.


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AuditorsKAccountantsK inancial AdvisorsK Anone giving 2rofessional

Advice

Auditors etc onl oe a dut of care if:

Auditor etc prepared report for purpose of inducing plaintiff #or a

determinate class of persons hich included the plaintiff$ to act in a

certain a- &

Auditor etc )ne or ought to have )non that plaintiff ould rel

on the report ithout see)ing further advice

;sanda inance Corp v 2eat Maric) (ungerfords

Dut often onl oed to compan- not investors


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F. Step: Breach of Standard of Care

%he level of care of a reasona!le person in the position of the defendant inthe circumstances

actors R (yon+ SC v S,irt R no codified in *rongs Act 2ro!a!ilit

Gravit

2ractica!ilit

ustifia!ilit

2rofessional advisers 3 the level of s)ill & care is that appropriate to a

person ith that professional statusK4ualificationsKe,pertise s.E *rongs Act >E@ #S&O01 p >F?$


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F. Step: Breach of Standard of Care

S@#F$ *rongs Act

S @#F$ %o determine if reasona!le person ould have ta)en precautions- Court

considers #among other things$:

#a$ pro!a!ilit that harm ould occur

#!$ li)el seriousness of harm

#c$ !urden of ta)ing precautions

#d$ social utilit of activit


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H. Step: Damages

%he plaintiff must sho some lin) !eteen the damage suffered and the

defendant0s conduct. %o factors for consideration are:

that the loss or damage as /directl caused0 ! the defendant0s !reach R causation9

and

that the loss as /not too remote0 from the !reach 3 remoteness

*ould a reasona!le person ith the )noledge and e,perience to !e e,pected of

a advisor etc of the advice have foreseen the )ind of damage that occurred5


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. Step: Defences

"eence%

Contri+utor*e-.i-ence

roportionatereduction o

dama-e%

Can +e up to100

o.untar i%A%%umption

!ota. deence,the p.ainti'i.. recover

nothin-

*o deence

)u.. amountrecovered

Disclaimer as usual


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Summar


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OvervieApp.ica+i.it

reach "ama-e% "eence%

roduct%art 3:5ACL

Statement%

S 18 ACL "ut oCare

reach oStandard oCare

"ama-e% "eence%

roduct% !ort o

ne-.i-ence

Statement% !ort o*e-.i-ence


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Don0t forget6

This week’s topic

Tutorials, attendance and preparation

Homework - online activit testing our )noledge and preparing for

-> Weekly Online Test- starting and visi!le from Saturda onards and counting toards

our grade'

Next week’s topics

1eading the material

Online Studplan e,ercises

2reparation for seminars and tutorials

Week 3 - InClass Slides.pptx

Documents

Transcript of Week 3 - InClass Slides.pptx