Throughout your interactions as a business or with other businesses, it is common to hear an array of legal phrases. One such phrase is ‘misleading or deceptive conduct’. It is crucial that you and your business know what this conduct is to prevent your business from misleading consumers and to recognise when you are the subject of deceptive actions. This article will set out:

  • what misleading or deceptive conduct is;
  • when misleading conduct is relevant or applicable; and
  • the consequences of committing misleading or detective conduct in New Zealand. 

What is Misleading or Deceptive Conduct?

Although it is a phrase that commonly arises in New Zealand law and business guidelines, there is not a clear definition of misleading or deceptive conduct. 

The phrase merely refers to conduct that, if viewed objectively, would be perceived as:

  • misleading; 
  • deceptive; or
  • likely to mislead or deceive. 

When evaluating whether an action or conduct was misleading, a court will evaluate whether a reasonable person with the characteristics of the ‘victim’ of the conduct would have been misled on reasonable grounds.

However, it is not necessary to demonstrate that the conduct in question actually misled this person. Instead, it merely has to have had the capacity to mislead or deceive. Furthermore, the person or business who committed the act in question does not have to intend for their conduct to be deceptive for it to qualify as misleading conduct.

Examples of Misleading or Deceptive Conduct 

As the definition of misleading conduct is so broad, it is useful to look at examples to understand what constitutes misleading or deceptive conduct.

Misleading Packaging

For example, imagine a product’s packaging states that the bottle contains 500mL of top quality, certified organic, extra-virgin olive oil. However, it actually contains 300mL of cheap, processed oil. In such an instance, the packaging was misleading as to the quantity and quality of the product. The retailer of this oil would have committed misleading conduct as they deceived customers as to the contents of that product.

Misrepresentation

Misleading or deceptive conduct also extends to misrepresentations. A misrepresentation is a false statement, or representation, about a past or present matter of fact.

For example, a supplier of televisions tells their customers that their TVs were $600, but are now $450. However, you were in the store before this sale had started and the TVs were only $500. In this scenario, the supplier has made a misrepresentation as to the previous price of the TVs. In doing so, they have created a false impression about their products and committed misleading conduct.

Silence

In certain circumstances, silence may also constitute misleading or deceptive conduct. This will be the case when an individual or business has some duty to disclose to the other person a piece of relevant information. 

Silence will amount to misleading conduct where a statement is made which is true, but other matters that make it misleading are omitted. 

For example, an individual offers to sell you their hotel. They specify quite a high sale price, which you believe is reasonable as the hotel had a very high turnover in the last three months. However, they fail to mention that the reason there was such a high turnover was that the hotel next door was under construction. The hotel accommodated all of the construction workers from that project for those three months. Therefore, this turnover figure was misleading, as it did not accurately represent the hotel’s average income.

When Does This Apply?

There are specific circumstances in which a person who has committed misleading or deceptive conduct can be legally liable for those actions.

In Trade

An individual or business will be liable for their misleading conduct or statements if they are in trade.

Being in trade refers to any:

  • trade;
  • business;
  • industry;
  • profession;
  • occupation; 
  • activity of commerce; or 
  • undertaking, relating to the supply of goods or services. 

This definition of trade also extends to the sale of land or any interest in land.

In Employment

There is also a prohibition on misleading conduct for offers of employment. 

Any offer of employment will be misleading if it involves conduct which is misleading or likely to mislead or deceive the recipient of the offer as to matters relating to that employment, uch as the:

  • availability; 
  • nature; or
  • terms and conditions.

Conduct of Others 

There are also certain circumstances where an individual or business will be liable for conduct that they did not actually commit. 

A person will be liable for the misleading conduct of another if they have aided, counselled, induced or conspired with that person in relation to that conduct.

Furthermore, there is an assumption that the conduct of an agent will be the conduct of their principal. As such, the principal will be responsible for conduct the agent committed on the principal’s behalf. However, in such a scenario, it still needs to be established that the principal was involved in trade. 

The Consequence of Misleading or Deceptive Conduct

If you have committed misleading or deceptive conduct in trade or in an offer of employment, or if an individual has committed such conduct on your behalf, you will have committed a breach of the law. 

If it is demonstrated in court that you have committed misleading or deceptive conduct, you may be subject to:

  • criminal proceedings;
  • an injunction on the misleading conduct; 
  • a court order; or
  • a large fine. 

Key Takeaways 

Misleading or deceptive conduct in New Zealand refers to any conduct that, when objectively viewed, would likely mislead or deceive the recipient of that conduct or statement. However, this conduct must have occurred in trade or employment to constitute an offence. As a business, it is crucial that you are evaluating whether your conduct in trade or in the provision of an offer of employment could be perceived as misleading. Doing so ensures that you will avoid the time-consuming and expensive process of litigation. If you believe that you have been the victim of misleading or deceptive conduct, contact LegalVision’s regulatory and compliance lawyers on 0800 005 570 or complete the form on this page.

FAQs

What does misleading conduct mean? 

Misleading conduct refers to conduct that, when viewed objectively, would likely mislead or deceive the recipient of that conduct or statement.

What is false and misleading advertising?

False or misleading advertising is when an advertisement misleads a reader as to the nature, size, quality or quantity of the product or good in question.

Are misleading ads illegal?

If the contents of an advertisement mean that the advertiser is committing misleading conduct, the advertiser is committing an offence under the Fair Trading Act. 

What are the consequences of false advertising? 

False advertising may lead to civil proceedings, criminal prosecution, being subject to a court order or injunction, or having to pay a large fine.

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