Risk Management: Practical ways to manage risks of prior representations

Risk Management: Practical ways to manage risks of prior representations

Panel Members 1. Steve Latham, Partner, MinterEllison (MC) 2. Douglas Campbell QC, Barrister 3. Tamra Seaton, Director, MDS Legal 4. Christina Sutherland, Corporate Lawyer, Minor DKL Food Group

Session Outline 1. Risks to be managed 2. Drafting techniques 3. Practical tips to minimise risk 4. Succeeding at trial 5. Questions

Common Causes of Action Common law misrepresentation: Fraudulent misrepresentation Negligent misrepresentation Innocent misrepresentation Misleading and deceptive conduct - section 18 of the Australian Consumer Law (ACL) Misleading representations about certain business activities - section 37(2) of the ACL Representations as to future matters section 4(1) of the ACL Unconscionable conduct section 21(1) of the ACL Contravention of the Competition and Consumer (Industry Codes Franchising) Regulation 2014 (the Code)

Critical Elements to be Proven Cause of Action Elements Fraudulent Misrepresentation Negligent Misrepresentation Innocent Misrepresentation False statement of a material fact addressed to the franchisee before or when the contract was made The false statement was intended to induce the franchisee to enter the contract The false statement did induce the franchisee to enter into the contract (reliance) The false statement was made knowingly, without belief in its truth or recklessly The franchisor owed a duty to take reasonable care that the statement was true and reliable The franchisor breached the duty that was owed to the franchisee The false statement caused the franchisee to suffer loss or damage A false statement was made but the franchisor was not fraudulent or negligent

Critical Elements to be Proven Cause of Action Misleading and Deceptive Conduct Elements The representation is false or misleading and deceptive or likely to mislead and deceive The franchisee relied on the representations when entering the agreement The representation relates to the profitability, risk or any material aspect of business activity The representation relates to a future matter The person has no reasonable grounds for making the representation Misleading Representations about Certain Business Activities Representations as to Future Matters

Critical Elements to be Proven Cause of Action Elements A person has, in trade or commerce, engaged in conduct that is unconscionable The conduct is in connection with the supply or possible supply of goods or services to a person The conduct is in connection with the acquisition or possible acquisition of goods or services from a person Unconscionable Conduct Cause of Action Obligation to Act in Good Faith Elements A party to a franchise agreement has acted dishonestly A party to a franchise agreement has failed to have regard to the legitimate interests of the other party

Remedies Remedies under the ACL Undertakings s.218 Public Warning Notices Section under the ACL s.223 Injunctions s.232 Damages s.236 Compensation s.237 Other Orders s.243 Non-Punitive Orders s.246 Remedies for Unconscionable Conduct Compensation for loss or damage Financial penalties Declaration that the contract is void in whole or in part Order that the contract or arrangement be varied Refunds Specific performance of specified services Remedies for breach of Franchising Code Court enforceable undertakings Infringement notices Financial penalties of up to $51,000 Injunctions Compensation & Damages Disqualification orders

RISK ENTIRE AGREEMENT CLAUSE NO REPRESENTATIONS CLAUSE FRANCHISEE COMPLETED SCHEDULE STRATEGY INDEPENDENT ADVICE PRIOR REPRESENTATIONS QUESTIONNAIRE

Neither the inclusion of an entire agreement clause in an agreement nor the inclusion of a provision expressly denying reliance upon pre-contractual representations will necessarily prevent the provision of misleading information before a contract was made constituting a contravention of the prohibition against misleading or deceptive conduct by which loss or damage was sustained. Guirguis Pty Ltd v Michel s Patisserie System Pty Ltd & Ors [2017] QCA 83 at [28] quoting Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at [130]

Questions