First Principles of Business Law

5. Protection against unfair business practices

5.2. False or misleading representations

A, an Australian retailer of household paints, finds a paint manufacturer in Korea who can supply a PVA paint at half the price charged by other suppliers. This is possible because the paint has cheap ingredients instead of expensive ones, but the cheaper paint does not last as long as more expensive ones. A orders a large quantity of the cheap paint and advertises it saying, amongst other things, 'Best quality paint at half the price. Approved by the Australian Building Council'. The Australian Building Council has certified that the paint is not dangerously toxic, but has not tested it for quality.

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(a) The statement made by A is a misrepresentation made in relation to the sale of goods. Such conduct is regulated by tort law, but not by the ACL.

(b) The statement made by A is a misrepresentation made in relation to the sale of goods. A's conduct amounts to an unfair practice which is prohibited by the ACL.