First Principles of Business Law

5. Protection against unfair business practices

5.4. Misleading conduct as to the nature of goods or services

A is an Australian retailer of herbal medicines. B, a customer, asks A if she has any herbal product that would be effective in preventing the bad headaches she is prone to. A tells B about a product made from various root extracts, which she says the manufacturers claim can reduce the frequency and severity of headaches. A tells B that these pills sell very well. Both of these statements are true. However A decides not to mention that some recently published research has demonstrated that none of the ingredients used in this product have any measurable effect on headaches, either alone or in combination.

Click here to see section 33.    Click here to see section 34.

(a) A has not said anything that is untrue and she is not obliged to disclose information that she has read and which she might not agree with. Choosing not to pass on particular information is not conduct which is prohibited by the ACL.

(b) A has not said anything that is untrue but, by not also disclosing the findings of the research, A is misleading B about the suitability of the goods she is buying. This amounts to conduct which is prohibited by the ACL.