The use of headline advertising is a key tool in grabbing
customers' attention, however its use is not always without
controversy. Often such advertisements come with qualifiers or fine
print which makes the deal far less appealing than it initially
appears. In many circumstances consumers rightly question whether
these advertisements are misleading or deceptive. In a recent
dispute between two of New Zealand's biggest carpet
manufacturers the Court of Appeal addressed this very issue.
In Godfrey Hirst v Cavalier Bremworth  NZCA 418
Godfrey Hirst accused one of its competitors in the carpet industry
Cavalier Bremworth of engaging in advertising which was misleading
and deceptive and breaching ss 9 and 13(i) of the Fair Trading Act
1986. The advertising in question related to a new line of carpets
which was advertised in a range of mediums with warranties such as
"Lifetime stain and soil resistance" and "25 year
fade resistance." Attached to these headlines were a number of
complicated and strict qualifiers which limited the effectiveness
of the warranties. The High Court found the qualifiers attached to
many of the headline advertisements were misleading and deceptive.
Nonetheless Godfrey Hirst still appealed the decision on the basis
that the bar was set too high as to what should be expected of
consumers targeted by headline advertising.
The first point considered by the Court of Appeal in determining
the appeal was to consider who fell within the meaning of a
"consumer." The Court held consumers were actual
consumers in the targeted class except for outliers. Outliers were
considered to encompass consumers who "are unusually stupid or
ill equipped, or those whose reactions are extreme or
fanciful." The Court noted that where representations are made
to the public at large all the public except outliers are to be
Having established those who could be considered consumers the
Court looked at the standard of care expected of a consumer. It was
held that a consumer must "exercise a degree of care which is
reasonable having regard to all the circumstances including the
characteristics (i.e. level of knowledge, acumen, ability and the
like) of the target group of customers."
The Court of Appeal then looked to consider whether the standard
had been set too high for consumers. The guiding principles
considered by the Court in the context of headline representations
with qualifying information were:
What is the overall impression or dominant message of the
advertisement as a whole?
Analyse the total effect rather than the separate effect of each
Was the qualifying information sufficiently prominent?
(proximate, prominent and sufficiently instructive)
Glaring disparity. Where there is a great disparity between the
headline representation and qualifying information the consumer
must be made aware of the true position in the clearest possible
Tendency to lure customers into error. Does the advertisement
viewed as a whole entice customers into the "marketing
web" (i.e. attracting customers into a shop selling the
product of the advertiser)?
The Court of Appeal held that the dominant message of the
advertisement conveyed to consumers was a range of carpets with
"superb warranties" which was considered misleading and
deceptive because of the qualifiers attached. For example, the
lifetime stain resistance warranty excluded "Pet or Human
stains" and other stains including blood, crayon, hand lotion
and lipstick. The Court also held that the qualifying information
was not sufficiently prominent. It held that qualification of
warranties as "limited" failed to sufficiently draw to
consumers' attention the qualifications, and the website
hyperlink to the warranties booklet failed to prevent the
misleading dominant message. It was held that even if consumers
could be expected to click on the link and review the warranties
booklet it was far too detailed and complex to be easily understood
by consumers. As the dominant message was considered misleading and
the qualifying information failed to address that point, the Court
held the advertisement had a tendency to tempt customers into the
The important implications of this decision are that it has
shown that where an advertiser attaches qualifying information to
headline advertising the information needs to be easily understood,
sufficiently prominent and able to correct the dominant message to
reflect the true meaning of the advertisement. Failure to do so
leaves advertisers in a position where they are likely to mislead
or deceive customers and face potential liability.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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