Section 18 of the Australian Commercial Law: Marcus Hesada Case
Section 18 of the Australian Commercial Law
Section 18 of the Australian Commercial Law (ACL) states an express prohibition on misleading or deceptive conduct, in that a “person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”
Originally, this provision was in Section 52 of the Trade and Practices Law, the predecessor of the ACL. Essentially, the two provisions are very much the same, except that the ACL amended the TPL to include persons, instead of solely involving corporations. Further, the ACL prescribes a norm of conduct to be followed in trade or commercial activities.
In a landmark case involving misrepresentation, it was ruled that the contravention, or the misleading information to be punishable by law had to be knowingly made by the individual. A party to be liable must with deliberate intent to deceive, aid, abet induce and or conspire to persuade and provoke another person to enter into a certain transaction.
The law originally was legislated to protecting consumers. It was enacted to protect the rights of the public and of the market from unscrupulous representations made by businesses and corporations. It safeguards the public from the unwanted effects of exaggerated claims resulting from sales talks, false advertisements, fake guaranties and warranties.
Conduct, particularly engaging in conduct is mentioned in Section 2 of the ACL and includes the doing or the refusal to do such act. In Henjo Investments v Collins Marrickville, silence of the accused party rendered it liable. The court ruled that the defendant’s silence in not disclosing the true capacity of the business relied upon by plaintiff was deception. The act need not be a positive commission of deception or false representation. It is actually sufficient that the act complained of omitted vital information, rendering it misleading to the counterparty.
In the case at bar, Hesada’s conduct may possibly classified as deceptive. To determine whether his conduct was deceptive or misleading, the circumstances surrounding the contract or transaction has to be fully examined. Hesada used several names and addresses all distinct from each other directed specifically towards circumventing the system’s algorithm. Assuming that the software was of the usual kind used in the usual bidding transactions conducted online, then perhaps the software or the bidding program would have rejected similar names and addresses entered.
An ambiguity however exists as to the names which were actually part of his legal name. That he used his first name for one account, his second name for another account, with largely similar addresses cannot be construed to have been a misrepresentation in the real sense. Certainly, such information belong rightly to him, in the absence of a law mandating full name of the person owning the account has to be disclosed.
Moreover, another question which may be unresolved can arise with accounts on names that were fictitious. There exists no law stating that online accounts need to contain the name as stated on a person’s birth certificate. There exists no legal prohibition in the use of aliases. That Marcus Hesada used different names but were accepted by the system cannot be classified as a misrepresentation. It cannot be said to be a false claim, because online accounts up to this day largely remain unverified. In the normal course of online businesses, there is no need to present a valid identification for the system to ensure that the name and information entered matches the legal information of the person behind it.
Thereafter, using the abovementioned arguments, Marcus Hesada may be liable for using the names of his relatives and their addresses to obtain bids in the company. However, as to his use of different names, which can be claimed as aliases and the use of his first name and second name separately, such cannot be said to have been a misrepresentation to the company.
Marcus Hesada Conducted his Act in Trade or commerce.
Before it can be finally said that Hesada’s act contravened the law, it has first to be identified whether it was made in the realm of trade and commerce. The term in trade or commerce encompasses a wide spectrum of activities incidental, related and or necessary in the performance of transactions. However, such liberal construction and interpretation would cause the law to include acts merely in pursuance of trade or commerce, such as an employee communication to another co-worker, resulting to overbreadth.
The term in trade or commerce has a rather very precise and restrictive construction. Jurisprudence states that the term was meant for activities central to the pursuance of the business and excludes the immense field of activities incidental to the completion of the aforesaid transactions.
Moreover, conduct of business which was one-off or was done singularly without any chance of being repeated was not considered as done in trade or in commerce when conducted by private individuals. However, in the case of corporations, even a one-time activity central to the business is still considered to be within trade or commerce.
Hesada’s case squarely falls in the context of trade or commerce. The advertisement was a one-off promotion for Sonickcam. Yet, such activity was central to the corporation, for it was crucial to creating public awareness of its new product. It can be argued that Hesada was a private individual. However, such would stand no ground because Hesada’s act of purchase were meant to render him profits which repeatedly occurred seventeen times.
Marcus Hesada’s Conduct in Trade and Commerce was Aimed to Misrepresent His Accounts from the Company.
The next step to determine whether Hesada was liable under the law is to examine his conduct in the context of misrepresentation and or deception. In contrast to the law on torts , the conduct need not be fully misleading. A remote chance or probability that it may lead another to believe otherwise, or that certain information was omitted resulting to a false reliance, or that information was purposely wrongfully coded which allowed another to be misled would make a party liable under ACL.
In Hesada’s case, he positively committed an act which was a false representation. Instead of using his own name, which he knew would be disallowed by the company’s website if used severally, he opted to use the name of other people. He used his first name, his second name, his relative’s name and other names which were non-existent. The bids he thus placed made the company believe that different personalities were interested in the camera. Additionally, he used some technical manipulation by means of programming to get past the verification of the website.
Finally, Hesada’s liability rests largely on whether or not his conduct was relied upon by the other party, who was misled or deceived into wrongfully entering the transaction. Evidence is not decisive to conclude that the other party was misled or largely depended on the act of the other in its response. Different factors which may or may not be related will influence a person or corporation to choose a certain option over another. However, as with the normal course of business, the online system can be said to have relied on the minute distinctions between each name that he entered. In relying so, the company awarded him several cameras, unknown to them that such were names of his relatives whom he used for his own personal gain.
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