Legal issues of making financial forecasts in business

When a business is seeking to raise capital or advertise as being for sale financial forecasts are often made in a way so as to appeal to the target audience – investors or potential buyers.  In some cases however, the forecasts made do not translate into reality giving rise to potential legal consequences.  As forecasts are indicators often relied used by investors to make decisions on whether or not to invest, statements that are incorrect may amount to misleading and deceptive conduct under the Australian Consumer Law (ACL) (being Schedule 2 to the Competition and Consumer Act 2010 (Cth)) and have potentially serious legal consequences. [Read more…]

Directors personal liability – misleading & deceptive conduct

Despite the corporate veil, there are many ways in which a director can be personally liable for activities the company which they direct.   One such ground is misleading and deceptive conduct pursuant to section 18 of the Australian Consumer Law (Cth)(ACL).  This question of personal liability is of concern to conservative and risk averse directors who attempt to strike the delicate balance between governance and entrepreneurialism.  Misleading and deceptive conduct can occur in a variety of circumstances in business dealings.  From misleading advertising, inaccurate projections to contractual dealings between parties.  It could be as simple as making misstatement regarding a profit forecast or embellishing the outcome of a contract. [Read more…]

The risks of ‘manufactured’ business testimonials: a lesson from the ACCC

On 18 December 2015, the Federal Court handed down an order for relief based on a case initiated by the ACCC in July 2014.  The order imposed penalties on A Whistle & Co Pty Ltd (the Respondent) for breaching the Australian Consumer Law (ACL) by publishing fake customer testimonials.  Whilst it is common marketing practice to use testimonials to create the appearance of customer satisfaction, the judgment, Australian Competition and Consumer Commission v A Whistle & Co (1979) Pty Limited [2015] FCA 1447 demonstrates why businesses should ensure that they engage in genuine and legitimate marketing, and avoid misleading or deceiving their consumers. [Read more…]

Misleading and deceptive conduct in business dealings

Business dealings between two or more parties often involve statements or representations during negotiations prior to reaching a concluded bargain. This article considers some case examples of conduct found to be misleading and deceptive in a variety of common business and commercial settings

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Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Limited [2014] FCA 634

Please note this article has been updated.

Supermarket giant Coles has been advertising bread using the phrases “Baked Today, Sold Today”, “Freshly Baked”, “Baked Fresh”, “Freshly Baked In-Store” and “Coles Bakery”. In reality, the bread was partially baked, in some instances overseas, up to six (6) months before being defrosted, with the final baking process occurring in Coles’ stores.

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Australian Competition and Consumer Commission v A Whistle (1979) Pty Ltd

The Australian Competition and Consumer Commission (ACCC) has reinforced its stance against the publication of false testimonies and reviews online instituting proceedings against A Whistle (1979) Pty Ltd  trading as Electrodry Carpet Cleaning (Electrodry). [Read more…]

Australian Competition and Consumer Commission v Allergy Pathway Pty Ltd (No 2) [2011] FCA 74

Misleading and deceptive conduct found because of failure to remove false statements on Facebook wall.

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