Australian Competition and Consumer Commission v Terania Pty
Ltd  FCA 732
Future representations must have proper representation and some
basis in fact.
Claims to the effect that a sale must end by a certain date are
not mere puff.
We have all seen these advertisements for clearance sales of
goods held at town halls, sports grounds and similar venues:
"All stock must go", "Last days",
"Business closing down", "No reasonable offer
refused". When are these statements misleading and
These proceedings concerned sales events for rugs and manchester
in Darwin and Canberra by Terania and a related company.
Advertising for these sales events included statements which were
misleading and deceptive that:
the sales would end at particular dates and times; by
the completion of the sale they would sell or otherwise dispose
of their entire stock of rugs; and
the goods in question had previously been offered for sale at
original price, so that the sale price represented a significant
reduction from the normal retail price.
Terania acknowledged that, at the time it made the
representations it did not have reasonable grounds for making those
representations which were misleading or deceptive conduct.
The court agreed and also noted that misleading representations
as to price were highly likely to mislead consumers. Justice
Mansfield noted that members of the public do not routinely know
the normal retail price of particular goods, a price which may
depend on the quality of the particular goods, which in turn may
also not be readily apparent to some members of the public. It was
not merely the gullible who may regard a "was" price as a
real indication of the normal retail price of particular
He thought that the representations as to the duration of the
sales events were also misleading as they might induce purchases
within or by the specified time. The concern would be that the
goods would not be on offer at that "sale" price after
Whether the representations that the stock must be cleared were
misleading was a more difficult question. Justice Mansfield noted
that there was room for different opinions. In Australian
Competition and Consumer Commission v Telstra Corporation Ltd
(2004) 208 ALR 459, Justice Gyles said:
"Reading the numerous cases in this field makes it
perfectly apparent that individual judges vary considerably in
their assessments of the effect of advertising. Some take a robust
view and credit consumers with a fair amount of cynicism about
advertisements and a fair amount of ability to make their own
judgments. Others are convinced of the power of advertisements and
are protective of the consumer. Neither side is right or wrong
– it is a matter of opinion."
He noted that there the case law recognised that what is called
"puffery" or exaggeration in advertising is not
unexpected. However, the lure of below "sale" prices
which the clearance representations offered was to get attendance
at the "sale" for the opportunity of effecting further
sales of products. Accordingly, Justice Mansfield thought that the
clearance representations extended beyond mere puffery.
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.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
In some cases these fees or surcharges are higher than what a bank charges to these merchants for use of the system.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).