Legal
Issue No. 9 - February/March 2003
Residential Property Market Beware - Your Sales Pitch May Mislead or Deceive?
Apartments are popping up all over Adelaide’s CBD and the suburban real estate market is in similar high demand. Real estate agents and property developers are out to make the most of this boom period. This is an opportune time for great sales but also a time when your sales pitch and that glossy sales brochure may land you in deep water.
Making an unrealistic estimate on the value of the property or prediction about capital growth in the future could be deemed to be misleading and deceptive conduct.
Section 52 of the Trade Practices Act 1975 (‘the TPA’) is a well known provision which states "a corporation shall not in trade or commerce engage in conduct that is misleading or deceptive or likely to mislead or deceive". Where the provision is breached, a complainant may seek damages.
The TPA gives rise to strict liability, that is, it does not matter whether you intended to mislead or deceive, the fact that you did is sufficient to make you liable for the loss suffered by another.
Real estate agents and developers should always be conscious of the comments they make to potential purchasers and ensure they are not likely to be misinterpreted. They should also ensure that the brochures and documents they use are in line with their comments and advice.
To determine whether a statement is misleading or deceptive the Courts will look to how it would be construed by the most vulnerable naïve and trusting of clients.
If an agent or developer ‘makes the sale’, inevitably a written agreement or contract will be entered into to confirm the sale and crystallise the finer details. In order to minimise the impact of representations made, consideration should be given to including a limitation, exclusion or non-reliance clause in the contract.
The TPA is designed to protect the public by setting minimum standards for business dealings. The Courts are generally not willing to allow you to contract out...
