Professional Documents
Culture Documents
Business Law
BTF11010
Semester 1, 2016
Seminar 3, week 3
Dr. Kerstin Steiner
General Matters
Seminar Content: Statements & Behaviour:
A.
B.
C.
Tort
Summary
General Matters
Material
Moodle: location for everything!
Written material
In-class activities
Post-class activities
10
Topic Objectives
Ch
ec
klis
Describe the law of torts, its general principles and the statutes of limitations for tort actions;
List and explain the necessary elements required to establish negligent misstatement and
apply them to a practical situation;
Identify the defences a defendant can raise in an action for negligence, and their potential
impact on damages paid;
Explain negligence and the introduction of civil liability legislation by federal, state and
territory governments;
Explain the elements of misleading and deceptive conduct and apply them to a practical
situation; and
Explain the distinction between common law and statute law, using the liability for
statements as an example.
(b) statute.
S 18 ACL,
Statute
Incorrect Advice
S 12 DA (1) ASIC
and
Corporations Act
2001 (Cth)
Seminar 3,
Chapter 3 PT
Seminar 10
Deceit/ Fraud
Not covered in
the subject
Negligent
Misrepresentatio
n
Seminar 3,
Chapter 3 PT
Breach of a term
Seminars 6, 8
Chapters 6, 7,9
and 9 PT
Common Law
Contract
Gibbs CJ in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982)
ATPR 40-307
Yorke v Ross Lucas Pty Ltd (1983) ATPR 40 -401 (Federal Court)
Disclaimer as usual
2. Step
Breach
Misleading or deceptive
or likely to do so
Conduct
Half truths
Opinions, usually not
covered except for
Lies
Expert opinion as
statement of fact
If totally
unsupported by the
facts.
3. Step
Damages
Causation
4. Step
Defences
Exclusion
clauses and
disclaimers
Not very
effective, see
Bateman v
Slatyer
(1987) ATPR
40-762
(Federal
Court)
1. Step: Applicability
It may be, for example, that a trader has suffered loss of business
because his or her customers have been misled by a competitors
misleading advertising.
The use of another traders distinctive words or products, features and slogans;
Similar business names (Taco Bell of Australia Inc v Taco Bell Pty Ltd.);
Comparative advertising when comparisons between products are claimed not to be accurate
(Eveready Australia Pty Ltd v Gillette Australia Pty Ltd [2000] ATPR 41-751);
Defamatory comments;
Character merchandising;
Silence, where there is an obligation to disclose (Henjo Investments Pty Ltd & Ors v Collins
Marrickville Pty Ltd (1988) 79 ALR 8).
The plaintiff is assisted by s 4 ACL which provides that a representation as to a future matter
shall be taken to be misleading if the author did not have reasonable grounds for making the
representation.
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Solution
Taco Company of Australia v Taco Bell
Pty Ltd
Issue: Breach of s 18 ACL by Taco Bell of Australia Pty Ltd?
1. Applicability
person
in trade or commerce
This
a
h o w n s w er i s l
to so
lve th eft in on p
ese p
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roble rpose to
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2. Breach
The court set down four guidelines in relation to whether the conduct complained of is likely to mislead or
deceive.
1.
It is necessary to identify the relevant section of the public who might be likely to be misled.
2.
2. Once the relevant section of the public has been identified, the matter is to be considered by reference to
all those who come within it.
3.
Evidence that some have been misled or deceived is admissible and may be persuasive, but it does not
itself conclusively establish that conduct is misleading or deceptive or likely to mislead or deceive.
4.
It is necessary to inquire why proven misconception has arisen because it is only by this investigation that
the evidence of those who are shown to have been misled can be evaluated and it can be determined
whether they are confused because of misleading or deceptive conduct on the part of the defendant.
Solution continued
Courts decision
'Taco Bell' had become associated with the Bondi restaurant some considerable time before the
United States Taco Company commenced operations in Sydney under the same name.
3. Damages
Causation
The cause of any actual or likely misconception was the use of the name by the United States
company which had come after the Bondi restaurant had established its reputation throughout
Sydney and accordingly should be restrained
As long as the Cronulla 'Taco Bell' can establish that it has acquired a reputation throughout
Sydney for Mexican food in that name, any later competitor who wished to use the same name
is likely to cause actual or likely misconception and could be met with an action under s. 52.
Important Points
Mere confusion does not amount to conduct that is misleading or deceptive: McWilliams
Wines Pty Ltd v McDonalds System of Australia
Even if a product has a close resemblance to the product of another manufacturer to the
point where the consumer would be likely to be misled, if the product is properly
labelled with the name of its own manufacture, there generally will not be a breach:
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd
Much of the litigation involves traders attacking each others advertising or other
representations, i.e. Eveready Australia Pty Ltd v Gillette Australia Pty Ltd (2000)
Unfair trading will not be caught as such: it must involve some element of misleading
conduct.
This will only occur if the conduct contains or conveys a misrepresentation: see Taco
Bell of Australia Inc v Taco Bell Pty Ltd.
Tort of Negligence
Donoghue v Stevenson
and Negligent Misrepresentation.
Duty of care
Standard of care
Definition:
Negligent Misrepresentation
A statement of fact, advice or opinion made in business that is relied upon by
another but which is inaccurate or misleading.
Historical Detour
Hedley Byrne & Co Ltd v Heller and Partners Ltd [1964] AC 465
Early Decisions
Candler v Crane Christmas & CO [1951] English Court of Appeal
Facts
Damages only in fraud case, following Derry v Peek as there was no evidence of
dishonesty, no liability for deceit
Case:
Hedley Byrne & Co v Heller & Partners [1964] AC 465
Facts
DECISION:
Hedley Byrne & Co v Heller & Partners
House of Lords held:
Disclaimers
Li n k
to C
ontr
a
ct L
aw
Case:
MLC Assurance Co v Evatt (1968) 122 CLR 556
Facts
MLC Assurance Ltd and Palmer Ltd were both subsidiaries of MLC Ltd
E invested in Palmer
DECISION:
MLC Assurance Co v Evatt
The High Court - (1968) 122 CLR 556 held that the defendant was
liable for their negligent misstatement.
Duty extended not only to professional advisors but also to persons who
give advice in serious circumstances as per Barwick CJ
The High Courts decision was overturned when the case was
appealed to the Privy Council.
Case:
Shaddock & Assocs. v Parramata City Council (1981) HIGH
COURT OF AUSTRALIA
Decision: Shaddock
1.
2.
he/she realises or ought to realise that the other person will act on it;
he/she owes a duty to exercise reasonable care when giving the advice or
information.
Roadmap: Overview
Liability under Common Law
1. Step
Duty of Care
Advice given in
serious manner
Advice giver should
realise trust and that
advice will be acted
upon
Reasonable that the
other person will act
upon it
Possible limitations
as per s48(1) Wrongs
Act
Risk forseeable
Risk not
insignificant
Reasonable person
would have taken
precautions
2. Step
Breach Standard of Care
Probability
Practicability
Gravity
Justifiability
Possible limitations as per
s 48(2) Wrongs Act
Duty to warn of risk, s
50
Reasonable person
would have taken
precautions, s 48 (2)
Standard of care for
professionals
Other principles
(alternative behaviour,
change of behaviour), s
49
3. Step
Damages
Causation
remoteness
4. Defences
Contributory
negligence
Voluntary risk
assumption
Disclaimer: This is one of my so called ROADMAPS no they are not giving you an answer to a legal problem
They provide you with a structure on how to answer a legal question
IMPORTANT: They are also sometimes incomplete, now, for instance, they are missing case studies. This means YOU have to complete it
Duty on the defendant to avoid making careless statements which cause harm.
Hedley Byrne v Heller (1964) established that the law will imply a duty of care
in the making of statements.
A duty of care extends not only to professional advisers but also to persons who
provide information: MLC v Evatt (1968)
This duty of care also extends to advice that is given in serious circumstances:
Shaddock v Parramatta City Council (1981)
A duty of care also arises and exists where there is a special relationship
between the parties: San Sebastian v Minister Responsible for Administering
Planning and Assessment Act (1986)
2.
3.
The speaker must realise that the representee intended to act on the
advice.
4.
Auditor
Representee
Company
Company
Shareholde
Shareholde
rr
Creditors
Creditors
Audito
r
Adviso
r
Potential
Potential
investors
investors
Banker
Banker
As auditors, PMH certified the accounts of Excel for the year ending
June 1989.
Esanda claimed that its decision make loans was in part due to its
reliance on the audited accounts of Excel.
No suggestion that the audit had been done especially for Esanda.
Auditor etc knew or ought to have known that plaintiff would rely
on the report without seeking further advice
Probability
Gravity
Practicability
Justifiability
3. Step: Damages
The plaintiff must show some link between the damage suffered and the
defendants conduct. Two factors for consideration are:
that the loss or damage was directly caused by the defendants breach causation;
and
that the loss was not too remote from the breach - remoteness
4. Step: Defences
Defences
Contributory
Negligence
Proportionate
reduction of
damages
Disclaimer as usual
Can be up to
100%
Voluntary Risk
Assumption
No defence
Total defence,
the plaintiff
will recover
nothing
Full amount
recovered
Summary
Overview
Applicabilit
y
Breach
Damages
Defences
Duty of
Care
Breach of
Standard of
Care
Damages
Defences
Products:
Part 3-5
ACL
Statements
:
S 18 ACL
Products:
Tort of
negligence
Statements
: Tort of
Negligence
Dont forget
This weeks topic
Tutorials, attendance and preparation
Homework, online activity testing your knowledge and preparing for
-> Weekly Online Test, starting and visible from Saturday onwards and counting towards
your grade!