Misleading Advertisement

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Sheldon College

Contract Law

Term 1, Legal Studies, 2013

Mitchell Bognar

Legal Speech:

In Australia’s ever growing business economy, contracts are becoming more evident in enforcing promises between parties. From contracts involving informal agreements (buying food from your local supermarket) to written documents concerning a legally binding agreement (buying and selling a block of land), contracts are in practically every concordat. The legal restrictions in relation to contract law are unclear with regards to company advertisement campaigns. The legal definition of misleading advertisements is undefined within the current Queensland Legislation, with businesses being unsure with how misleading differs from invitation to treat and puffery. This speech will therefore assess these legal terms, discuss how the punitive damages are inconsistent between cases and portray how the punishments aren’t deterring companies from producing misleading advertisement campaigns. Therefore portraying the inefficiencies within the Competition and Consumer Act (2010) (Cth), whilst providing a recommendation to improve the current contractual legislation.

The legislation in relation to misrepresentation has been a controversial topic for years, becoming more efficient only in recent times within Australia. With significant alterations to the Trade Practices Act (1974) (Cth), it was renamed under the title Competition and Consumer Act (2010) (Cth). Australian Consumer Law (Cth) is encompassed within the act under schedule 2, producing equality within terms of contract and consumer law within Australia. This new legislation is enforced by the Australian Competition and Consumer Commission (ACCC), an independent regulatory body put in place by the Government. Covering the enforcement roles of the Competition and Consumer Act (2010) (Cth) and a range of additional legislations within Australia (About the ACCC, 2011). The legislation covers all variations of advertisements including newspapers, television adverts and Internet sources to name a few. Amendments upon the Trade Practices Act (1974) (Cth) were enforced to produce a single, national law to protect consumers and ensure fair-trading in Australia.

The ACL introduced new consumer protections, a national product safety system and a range of new enforcement powers for the ACCC. Producing some clarity understanding of misleading advertisement laws for both Australian consumers and businesses. Implementing breaches of $1.1 million dollars for corporations and $220 000 for individuals. Whilst at the same time, the ACL introduced new remedies involving public warning notices and infringement notices (Amending Legislation, 2011). In return improving the overall effectiveness of misleading advertisement laws and regulations within Australia.

The first issue is in relation to consumers and business organisations being somewhat unclear as to the difference between the contract law terms: misleading advertisement, puffery and invitation to treat, causing the Competition and Consumer Act (2010) (Cth) to be unclear and inefficient. Invitation to treat originates from the Latin phrase invitatio ad offerendum meaning ‘inviting an offer’. In other words classified as an expression of willingness to negotiate. Puffery refers to the advertisements that rely upon exaggerations and opinions with little credible evidence to support its obnoxious claims. Whilst misleading advertisement refers to the deliberate use of false or misleading material to negatively influence the public. These contract law terms are closely linked causing confusion within the courts, consumers and also business organisations. For example, there is no legal distinction between puffery and misleading advertisements, however puffery has received some latitude to advertisers and sellers (Advertising and Selling, 2007). However as the community has different beliefs and opinions, some puffery statements could be...
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