Misleading or Deceptive Conduct: Australia's Most-Pleaded Cause of Action

Somewhere in the pleadings of almost every Australian commercial dispute — the business purchase that turned out to be buying smoke, the franchise that never made a dollar, the apartment that looks nothing like the render — sits the same allegation: that the other side engaged in conduct that was misleading or deceptive, or likely to mislead or deceive. This is section 18 of the Australian Consumer Law — routinely described as the most-pleaded cause of action in the country. Where an English lawyer reaches for misrepresentation and an American for fraud, an Australian reaches for section 18 first and pleads everything else in the alternative.

The reason is structural. The provision is a single sentence: a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. There is no requirement of dishonesty, no requirement of carelessness, no requirement that the parties ever had a contract. The test is objective — what did the conduct convey, and was that impression false — and the remedies run all the way from damages to unwinding the transaction entirely.

This guide explains where the section applies, who can sue and be sued, what counts as misleading conduct (including silence, predictions and sales puff), why disclaimers rarely help, the remedies available, and the everyday scenarios where the section bites hardest.

One sentence, fifty years of case law

Section 18 lives in Schedule 2 to the Competition and Consumer Act 2010 (Cth) — the schedule that constitutes the Australian Consumer Law, applied uniformly across the Commonwealth, states and territories. It is the direct heir of the celebrated section 52 of the Trade Practices Act 1974 (Cth), and the case law decided under section 52 continues to govern its interpretation — older judgments citing section 52 are talking about the same norm.

Three features explain its dominance in Australian litigation:

No fault required. Honesty is not a defence; nor is reasonable care. A defendant who genuinely believed every word is still liable if the conduct, judged objectively, was misleading and caused loss. This separates section 18 from common-law deceit (which needs dishonesty) and negligent misstatement (which needs a duty of care and a failure to meet it).
No contract required. The section reaches pre-contractual negotiations, advertising to the world at large, and statements made to people the defendant never dealt with directly.
Broad, flexible remedies. Damages, injunctions, and orders varying or unwinding contracts — a wider toolkit than contract law offers.

Because a misleading statement made during negotiations often also ends up as a term of the resulting contract, section 18 is routinely pleaded alongside breach of contract. The statutory claim frequently does the heavy lifting, because it does not depend on construing the contract and cannot be excluded by it.

The gateway: conduct in trade or commerce

The section's one real boundary fence is the phrase in trade or commerce. The conduct itself must bear a trading or commercial character. In Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594, the High Court held that a statement made internally between employees on a building site was not conduct in trade or commerce, even though the employer was plainly a commercial enterprise. What matters is the character of the conduct, not the character of the person engaging in it.

The practical consequence: purely private dealings fall outside the section. A one-off private sale of your own car or home is generally not conduct in trade or commerce, however misleading the description. But the net is still very wide — it catches businesses dealing with consumers or with each other, professionals advising clients, agents marketing property, and franchisors recruiting franchisees.

Who can sue — and who can be sued

Anyone who suffers loss because of the conduct can sue. There is no requirement that the claimant be a consumer: listed companies sue their competitors under section 18, purchasers sue vendors, franchisees sue franchisors. Despite its home in the Australian Consumer Law, the section protects anyone misled in a commercial setting.

On the defending side, liability attaches to the person who engaged in the conduct — companies and individuals alike — and the ACL also exposes those involved in a contravention. A director or employee who personally made the misleading representation, knowing the true position, can be pursued personally alongside the company. For claimants facing an insolvent corporate defendant, that accessory route is often the difference between a judgment and a recovery.

What counts as misleading or deceptive

Judged through the audience's eyes

Conduct is assessed as a whole, in its full context, through the eyes of the audience to whom it was directed. In Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, the High Court emphasised that conduct is not misleading merely because someone, somewhere, might carelessly misunderstand it. Where conduct is directed at the public — advertising, packaging, product names — the question is how ordinary and reasonable members of the target class would take it, putting aside reactions that are extreme or fanciful: Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45.

Context can also determine whose conduct it is. A party that merely passes on someone else's representation, without adopting or endorsing it, may not itself engage in misleading conduct. That was the basis on which the High Court held Google not liable for misleading sponsored links created by advertisers: Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435.

Silence and half-truths

Staying quiet can mislead. There is no general duty to volunteer information, but silence contravenes section 18 where the circumstances give rise to a reasonable expectation that, if a particular matter existed, it would be disclosed. Half-truths are the classic case: tell a purchaser the business's revenue and you may not stay silent about the one customer who supplies most of it and has just given notice. In arm's-length commercial negotiations between experienced parties, however, the courts are slower to find that mere non-disclosure misleads — the High Court's decision in Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357 is the leading illustration. The more the parties are expected to look after themselves, the more it takes for saying nothing to cross the line.

Predictions, opinions and future matters

A forecast is not misleading merely because it does not come true. But the ACL contains a trap for optimistic sellers: a representation about a future matter — projected earnings, expected completion dates, anticipated rental returns — is taken to be misleading unless the maker had reasonable grounds for making it, and it is the maker who must point to the evidence of those grounds. A franchisor who hands over glowing profit projections, or a developer who promises a guaranteed rental yield, had better be able to produce the workings that supported the number at the time it was given.

Opinions sit nearby. Expressing an opinion implies, at least, that it is genuinely held — and often that some rational basis supports it. An opinion the speaker does not hold, or has no basis for, can be misleading conduct even though it is dressed as mere viewpoint.

Puffery: the borderline

The law tolerates sales talk that no reasonable person would take literally. Claiming to serve the best coffee in Melbourne is puff; claiming the cafe turns over eight thousand dollars a week is a representation of fact. The dividing line is specificity — the more concrete and measurable the claim, the less room to shrug it off as advertising exuberance. Modern courts read puffery narrowly; vagueness is the seller's only shelter, and it is thin.

Why disclaimers and fine print rarely save you

Section 18 is a statutory norm of conduct, and parties cannot contract out of it. Entire-agreement clauses, no-reliance clauses and boilerplate acknowledgments do not exclude the statute — a point that surprises businesses who assumed their contract closed off pre-contractual claims. Such clauses are not pointless: they can be evidence bearing on whether the claimant really relied on the alleged representation. But they are not the force-field their drafters intend.

Disclaimers work only where they change what the conduct, taken as a whole, actually conveys. The rare success story is Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592, where a small real estate agency's brochure reproduced a survey diagram with a clear statement that the agency was merely passing on information from others without verifying it; dealing with sophisticated purchasers who had their own advisers, the agency was found not to have made the representation itself. The lesson is not that disclaimers win — it is that only a disclaimer prominent and specific enough to alter the overall impression does anything at all. Fine print beneath a glossy promise changes nothing.

Remedies: damages, injunctions and unwinding the deal

The remedial provisions are where section 18 earns its reputation.

Damages under section 236. Anyone who suffers loss or damage because of the conduct can recover it. The measure is generally the loss actually flowing from being misled — often the difference between what you paid and what the thing was truly worth, plus consequential losses.
Injunctions under section 232. Courts can restrain misleading advertising or conduct before or while it continues — a weapon competitors use against each other's campaigns as readily as consumers use it against traders.
Orders remaking the transaction. The ACL gives courts strikingly broad ancillary powers: declaring contracts void in whole or part, varying their terms, refusing to enforce them, ordering refunds or the return of property. A contract procured by misleading conduct can, in effect, be rescinded or rewritten — relief contract law itself would struggle to deliver.

Two footnotes. First, a contravention of section 18 alone attracts no civil pecuniary penalty — it is primarily a private-remedy provision, though the ACL's specific false-representation prohibitions (such as section 29) carry substantial penalties and are enforced by the ACCC. Second, damages claims under section 18 are generally apportionable: a defendant can seek to spread liability among concurrent wrongdoers who contributed to the same loss, which complicates recovery in multi-party disputes (vendor, agent, adviser).

Proving it: reliance, causation and the six-year clock

Liability may be strict, but causation is not presumed. The claimant must prove loss suffered because of the conduct — which typically means proving reliance: you were led into error, you acted on it, and acting on it caused the loss. Expect the fight to centre on the counterfactual. Had the truth been told, would you have walked away, paid less, or done the deal anyway? A claimant who would have proceeded regardless recovers nothing, however misleading the conduct was.

Pleading discipline matters. A statement of claim should identify precisely what conduct is relied on (the words, the document, the silence), what representation it conveyed, why that representation was false or without reasonable grounds, what the claimant did in reliance, and how the loss flows. Vague allegations that a course of dealing was somehow misleading invite strike-out applications.

The limitation period for damages is six years, running from when the cause of action accrued — which is when loss was first suffered, not necessarily when the misleading statement was made. Loss is often suffered on entry into the transaction, so treat the date of the contract as your prudent starting point and do not gamble on a later accrual date.

Financial services: the ASIC Act mirror

One structural quirk catches the unwary. Conduct in relation to financial products and financial services is carved out of the Australian Consumer Law and governed instead by mirror provisions in the Australian Securities and Investments Commission Act 2001 (Cth) — principally section 12DA, which prohibits misleading or deceptive conduct in relation to financial services in materially identical terms. The test and the case law are the same; only the statutory address changes. If your dispute concerns an investment product, insurance, credit or financial advice, plead the ASIC Act provision — the error is usually curable, but tidy pleading saves cost and credibility.

Where section 18 bites: four everyday scenarios

Business sale misrepresentations

The classic. A vendor's information memorandum overstates revenue, understates costs, or omits the customer about to leave. The purchaser's own due diligence does not excuse the vendor's misleading figures, though it will feed the reliance and causation fight — the vendor will argue you relied on your accountant, not the memorandum. Keep every version of every document you were given.

Franchise recruitment

Franchisors owe disclosure obligations under the Franchising Code of Conduct, and earnings projections given to prospective franchisees are quintessential future-matter representations: if there were no reasonable grounds for the numbers at the time, the representation is taken to be misleading. Failed-franchise litigation in Australia runs on section 18.

Property developer marketing

Off-the-plan renders showing parkland where a second tower will stand, promised amenities that never materialise, rental guarantees without any basis — property marketing generates a steady stream of section 18 claims, precisely because the buyer commits years before the product exists.

Online reviews and comparative advertising

A business that writes or commissions fake reviews of itself, plants fake negative reviews of a competitor, or selectively suppresses genuine negative feedback engages in misleading conduct, and the ACCC has pursued exactly that. Comparative advertising is lawful but must be accurate — misdescribe the rival's product and the rival has a ready-made claim. Note the boundary: a genuine customer's honestly held bad review is generally not conduct in trade or commerce, and a business aggrieved by a false review is usually looking at defamation rather than the ACL.

If you are bringing — or facing — a claim

For claimants: pin down the conduct with documentary precision before you plead. Assemble the brochures, emails, projections and messages; work out what you would have done differently; and move well inside the six-year window. Smaller consumer-scale claims can often run in state civil and administrative tribunals at modest cost; substantial commercial claims belong in the Federal Court or the state courts.

For defendants: a statement of claim pleading section 18 is not a verdict. The recurring defence themes are that the conduct was not in trade or commerce, that in full context it conveyed no false impression, that any future-matter representation rested on documented reasonable grounds, that the claimant did not rely or would have proceeded anyway, and that other wrongdoers should share any liability. If you have been served, see our guide to responding to a statement of claim in Australia — deadlines run whether or not you think the claim has merit.

Section 18 is short, strict and everywhere. Treat every specific factual claim you make in commerce as one you may someday have to prove you had grounds for — and treat every specific claim made to you as one the law may help you hold the maker to.

This article is published by CommonBench for informational purposes only and does not constitute legal advice. If you are weighing a misleading or deceptive conduct claim or defending one and need to test how section 18 applies to your facts, try CommonBench — AI-powered legal research with verified citations across five common law jurisdictions.