Misleading and Deceptive Conduct in Trade or Commerce Explained

Table of Contents

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1. What is "Trade or Commerce" in Australian Consumer Law?

2. When Is Conduct ‘In' Trade or Commerce? 

3. Judicial Limits on "Trade or Commerce" in Private Transactions

4. Practical Considerations for Sellers and Buyers

5. Remedies for Misleading or Deceptive Conduct

6. Frequently Asked Questions

7. How Arida Lawyers Can Help

 

Key Takeaways

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• Liability for misleading or deceptive conduct arises only if the conduct occurs in trade or commerce. The conduct itself must bear a commercial character, not merely happen within a business setting (e.g., Concrete Constructions; Hi-Rise).

• Private, one-off sales (e.g., a family home or a personal vehicle) are usually not in trade or commerce. The business character of an agent is not imputed to private vendors (e.g., Williams v Pisano; Walker v Sell).

• Sales of a business, going concern, or commercial asset, even if extraordinary or one-off, can be in trade or commerce (e.g., Bevanere; Sigma; Re Ku-ring-gai). Charter-vessel sales marketed with income/forward bookings are captured (Dudney v Larsson).

• Remedies include damages, rescission, repairs and consequential losses.

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What is "Trade or Commerce" in Australian Consumer Law?

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1.1 Statutory Definition

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Section 2 of the ACL defines trade or commerce to mean:

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“(a) Trade or commerce within Australia; or

 (b) between Australia and places outside Australia;

       and includes any business or professional activity (whether or not carried on for profit).”

 

Although broad, the courts have imposed important judicial limits.

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1.2 The Conduct Must Itself be In Trade or Commerce

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In Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594, the High Court held at [602] to [605]:

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“Consumer Protection” it is plain that s 52 was not intended to extend to all conduct, regardless of its nature, in which a corporation might engage in the course of, or for the purposes of, its overall trading or commercial business. Put differently, the section was not intended to impose, by a side-wind, an overlay of Commonwealth law upon every field of legislative control into which a corporation might stray for the purposes of, or in connection with, carrying on its trading or commercial activities. What the section is concerned with is the conduct of a corporation towards persons, be they consumers or not, with whom it (or those whose interests it represents or is seeking to promote) has or may have dealings in the course of those activities or transactions which, of their nature, bear a trading or commercial character”.

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Justice Murphy upheld the decision made in Concrete Constructions, namely that the conduct must be 'in' trade or commerce in the case of Hi-Rise Access Pty Ltd v Standards Australia Ltd [2017] FCA 604; BC201704168 at [134].

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The above decisions reinforce that section 18 of the Australian Consumer Law does not extend to all forms of corporate conduct, but is instead confined to conduct that occurs in the context of commercial dealings with third parties and consumers.

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When Is Conduct ‘In' Trade or Commerce? 

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While section 18 of the Australian Consumer Law does not apply to every transaction, courts have consistently held that certain conduct, particularly where commercial purpose or context is evident, may be captured even if it arises from an isolated or extraordinary event. A clear example is found in Bevanere Pty Ltd v Lubidineuse (1985) 7 FCR 325, where the Full Federal Court held that the sale of a beauty clinic by a company constituted conduct in trade or commerce, despite the fact that the corporation was not in the business of selling clinics. The court found that the sale was not an isolated private dealing but was part of the broader commercial activities of the business, particularly in circumstances where the business was being wound down. The sale had commercial features and was made in a business context, which brought it within the scope of the ACL.

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This principle was further reinforced in Sigma Constructions (Vic) Pty Ltd v Maryvell Investments Pty Ltd (2005) ATPR 42-048, where the Court confirmed that a business does not need to regularly engage in a particular type of transaction for that transaction to fall within the meaning of "in trade or commerce." In that case, the grant of a temporary licence over property, although unique and non-recurring, was found to be commercial in nature. The Court held that even an extraordinary or one-off transaction, such as the sale of a business, the disposal of a capital asset, or the granting of a commercial licence, can fall within the scope of the ACL if the transaction is connected to the business’s broader commercial interests.

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The Victorian Supreme Court’s decision in Boogs v Missen [2017] VSC 50 also confirms that whether a transaction occurs in trade or commerce requires a fact-intensive enquiry. There, the sale of a high-value horse raised the question of whether the transaction was a private deal or part of commercial activity. Drawing on earlier cases, including Bevanere Pty Ltd v Lubidineuse and O’Brien v Smolonogov, the Court outlined a non-exhaustive list of factors relevant to assessing the commercial character of a transaction. These included:

 

• the way the sale was advertised;

• the nature and terms of the agreement;

• whether the agreement appeared to reflect a commercial or private arrangement;

• the value of the item sold;

• the use (including advertised use) of the item;

• the dominant reason for the purchase of the item; and

• the vendor or seller's background, including whether they had previously engaged in similar transactions.

 

The above authorities make clear that the courts will not be confined by rigid classifications of commercial versus private activity. Instead, they will examine the full context of the transaction and the conduct in question, focusing on whether it bears the hallmarks of commerciality. Even infrequent or one-off dealings may attract the operation of the Australian Consumer Law where they are sufficiently linked to business purposes, structured commercially, or involve representations made to third parties. This nuanced approach ensures that section 18 of the Australian Consumer Law continues to offer meaningful consumer protection while respecting the boundary between private conduct and commercial dealings in the marketplace.

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Judicial Limits on "Trade or Commerce" in Private Transactions

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Walker v Sell [2016] FCA 1259 and Williams v Pisano [2015] NSWCA 117 highlight the judiciary’s careful approach in distinguishing private conduct from that which occurs in trade or commerce for the purposes of section 18 of the Australian Consumer Law.

 

In Walker v Sell, Bromwich J held that the private sale of a collectable motor vehicle for $135,000 did not satisfy the requirement of being in trade or commerce. Despite the vehicle being of high value and having been hired out on a limited basis over three decades (earning approximately $2,000 in total), the Court found that such activities were incidental, sporadic, and insufficiently connected to a commercial enterprise. The hiring was described as "de minimis and peripheral" to the seller's primary purpose, which was private ownership.

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Similarly, in Williams v Pisano, the NSW Court of Appeal determined that the sale of a residential property following renovations, even where profit was a motivation, did not amount to conduct in trade or commerce. The Court emphasised that merely using an estate agent did not transform the vendors' conduct into commercial activity. The agent’s business status could not be imputed to the private sellers. Moreover, while interior decoration or renovation may in some contexts amount to a commercial activity, in this case it was tied to the use of the property as a personal residence and did not alter the essential domestic and private character of the transaction.

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Together, these decisions affirm that the commercial character of the transaction itself, not merely its scale, value, or professional presentation, determines whether the ACL applies. Importantly, private individuals selling personal assets do not become subject to section 18 merely by advertising publicly, hiring professionals, or hoping to turn a profit.

 

Practical Considerations for Sellers and Buyers

 

When entering into transactions involving the sale or purchase of significant assets, such as property, motor vehicles, vessels, or businesses, parties must take care to ensure compliance with the Australian Consumer Law, particularly regarding the prohibition on misleading or deceptive conduct. Both sellers and buyers carry distinct legal responsibilities and risks in such dealings. A clear understanding of the principles underpinning section 18 of the ACL can help parties avoid liability and mitigate financial loss.

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For businesses and individuals acting as sellers, it is essential to ensure that all representations made to prospective purchasers are accurate, complete, and capable of being substantiated. Misleading conduct can arise not only through overt misstatements but also through omissions or silence in circumstances where a reasonable person would expect disclosure. Sellers should disclose any known defects or adverse information about the asset or business, particularly where such facts would influence a purchaser’s decision to proceed. Care must be taken in the preparation of advertisements, promotional materials, and verbal representations. Exaggerated or unqualified claims, particularly about asset performance, financial return, or condition, can give rise to liability even where made without intention to mislead. If there is any uncertainty as to whether a transaction is occurring in a commercial or private context, this should be clarified in writing, and the parties’ expectations recorded appropriately in the agreement.

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From the buyer and consumer's perspective, the risk of being misled can be reduced through prudent due diligence. Buyers and consumers should not rely solely on verbal representations or promotional content; instead, they should request written assurances about the condition, functionality, or earning capacity of the asset or business. Independent inspections, appraisals, or legal advice should be sought where appropriate, particularly in transactions involving high-value assets or ongoing income streams. If a seller presents themselves as acting in a business capacity or has a history of similar transactions, the buyer should consider whether the transaction may attract protections under the Australian Consumer Law and frame their expectations accordingly. Where doubts exist, buyers and consumers should take steps to ensure key representations are reflected in the contract, allowing for remedies in the event of misstatement or non-disclosure.

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Together, these precautions help ensure transparency, manage expectations, and reduce the risk of disputes arising from alleged misleading or deceptive conduct.

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Remedies for Misleading or Deceptive Conduct

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Where a buyer or consumer has suffered loss or damage as a result of misleading or deceptive conduct that has occurred in trade or commerce, section 236 of the Australian Consumer Law provides a statutory right to seek damages. The remedies available will depend on the circumstances of the case, the nature of the misrepresentation, and the loss suffered.

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The most common remedy is damages, which aim to place the aggrieved party in the position they would have been in had the misleading conduct not occurred. This may include compensation for direct financial losses, such as the difference between the price paid and the actual value of the asset, as well as associated expenses. Where the conduct induced a party to enter into a contract, courts may also award damages for consequential losses, such as repair costs, lost revenue, or other reasonably foreseeable losses flowing from the misleading and deceptive conduct.

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In certain circumstances, a buyer may also seek rescission of the contract, particularly where the misleading conduct was fundamental to the transaction. Rescission operates to unwind the agreement, returning the parties to their pre-contractual positions.

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Importantly, remedies under the Australian Consumer Law are available regardless of intent, meaning it is not necessary to prove that the seller intended to mislead. What matters is whether the conduct was objectively likely to mislead or deceive a reasonable person in the circumstances.

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Frequently Asked Questions

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Q1. Does every misleading statement give rise to a legal remedy under the ACL?

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No. For section 18 of the Australian Consumer Law to apply, the misleading or deceptive conduct must occur in trade or commerce. This means the conduct must have a commercial character. Misstatements made in purely private or domestic contexts, such as the sale of a personal item, generally do not fall within the ACL unless the transaction itself is sufficiently commercial in nature.

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Q2.  What kinds of transactions have been found to be “in trade or commerce”?

 

Courts have held that transactions such as the sale of a business, a going concern, or a commercial asset, even on a one-off basis, can satisfy the “in trade or commerce” test. Examples include sales of clinics, charter vessels, or valuable goods marketed with income potential or in a commercial context.

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Q3. What remedies are available if I’ve been misled in a commercial transaction?

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Buyers or consumers misled in trade or commerce may be entitled to damages, rescission of the contract, or compensation for loss of value, repair costs, lost income, or other financial harm.

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Q4. Can a business be liable under the ACL even if the misleading conduct wasn’t intentional?

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Yes. Section 18 of the Australian Consumer Law imposes a strict liability standard. It is not necessary to prove intent to mislead, what matters is whether the conduct was objectively likely to mislead or deceive a hypothetical reasonable person.

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Q5.  How can a buyer protect themselves from being misled?

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Buyers should undertake proper due diligence, request written representations about key features of the asset, business or goods, and seek independent legal advice. Key representations should be documented in the contract to support future legal claims if needed.

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How Arida Lawyers Can Help

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At Arida Lawyers, we provide strategic, clear advice in property disputes, business disputes, contractual disputes and consumer disputes.

 

Whether you are a business defending a claim involving representations made during a sale, or a purchaser seeking to recover losses after being misled in a commercial transaction, such as a property sale, business acquisition, vehicle, or vessel purchase, we can assist you by providing clear, strategic advice, guidance and representation.

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If you are dealing with a potential consumer law issue, wish to understand your rights and obligations in a transaction, require advice on misleading or deceptive conduct under Australian Consumer Law, we invite you to contact Arida Lawyers for a free 10-minute consultation.

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​​This article provides general information relevant to our expert services. It is not legal advice and should not be relied upon as such. If you are seeking legal advice, you should contact us for a free initial consultation.

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