Fta Misrepresentation - LAWS202 Law of Contract

FTA Misrepresentation Saturday, 11 September 2010 8:21 p.m. Not about contracts: about conduct in the marketplace ("in trade") But most contracts are entered into 'in trade', so has effect. ss 10, 11 Misleading conduct in relation to goods/services (no person in trade engage in conduct liable to mislead as to nature, characteristics, suitability for a purpose, or quantity of goods. s 14 False [or misleading] representations No person shall, in trade, in connection with the (possible) supply/promotion of goods or services (a) Say basically anything incorrect. Section 9 "No person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive." "Trade" defined in s2(1) - Any trade, business, profession, occupation, activity of commerce or undertaking relating to the supply/acquisition of goods or services, or disposition of any interest in land - excludes private sales "Deceptive" Section shouldn't be burdened by prior case law due to baggage. Words are clear, do not need judicial gloss. - Smythe Judicial exegesis can do little to expand upon the ordinary words, and cannot supercede them. - Bonz "Deceptive or misleading conduct" Bonz Group v Cooke There is no element of intention necessary for contravention of s 9. Misleading or deceptive conduct generally consists of representations whether express or by silence or conduct. Breach = "where conduct results in a substantial section of the public being misled or deceived or a likelihood of that" Must prove a factual basis for the a claimed erroneous assumption resulting from conduct. Cooke started selling jerseys similar to Bonz Group's to Japanese tourists. Had to prove that there are a significant number of short-stay Japanese tourists coming to NZ with understanding of Bonz garments. Not sufficient evidence to warrant inference that the specific features relied upon signified a particular source. Test 1: 1) Identify a target audience for the conduct. 2) Decide whether a reasonable member of that audience would be misled. AMP v Heaven 1. Adopts test that implies that misrepresentation is unnecessary. 1) But: Red Eagle Corporation v Ellis [2010] SC: not a prescriptive test - approach in any case depends on type of situation under scrutiny. a) e.g. Whether injurious consequence has happened, is feared, whether claim is brought by commerce commission... b) Different standard needed for different representees: 1. Conduct which would be objectively regarded as likely to deceive a consumer would be less likely to deceive a businessman. 2. Lower standard still for individuals known by defendant to have intellectual difficulties. 3. Conduct directed one on one compared to wide advertising campaigns. Question: would a reasonable person in claimaint's situation, with characteristics defendant ought to have known, likely hav e been deceived? Not necessary to decide whether anyone was ACTUALLY misled. Higher threshold in commercial cases "S 9 does not provide a guarantee to purchasers who fail to look after their own interests. This was a transaction between so phisticated, independently advised parties. Imposing liability under s 9 would cut deeply into the principle of caveat emptor." - Janus Nominees v Fairhall [2009] Actual misrepresentation necessary Premium Real Estate v Stevens [2009] NZCA takes narrow view of s 9, reinforces the need for a misrepresentation 1) Based on the need to maintain the defence of holding an honest, reasonable opinion. a) Can't contract out of FTA b) May have done all that could reasonably be done to limit liability. c) Overrides Smythe v Bayleys (HC)... David v TFAC [2009] CA Australian franchise, sold to first NZ franchise on basis of representation that it would be successful. 1) Likely an opinion, as no basis for knowledge of how franchise will go in new environment (no special expertise like in Esso) 2) A representation of opinion cannot be 'deceptive or misleading' conduct unless: a) Not honestly held. b) Not held on reasonable grounds. 3) Reasonableness of opinion to be assessed: a) At time of representation, or b) At time of contract formation (if factual circumstance has changed to undermine opinion's basis) Silence and the FTA Premium Real Estate v Stevens [2009] CA Stevens were advised by REA Mr Guy, who gave honest opinion of value of property under true market value. No misleading condu ct. Stevens sold at under-value to Mr Larsen, who's real estate agency was Premium. Contract Page 66