A post in another forum questioned whether a builder's sign advertising a package price was misleading and deceptive because the house pictured on the sign contained finishes (eg different roof and render) that were not included in the advertised price.

Generally:

1. Conduct will be misleading and deceptive if it induces or is capacble of inducing error. So, put simply, a consumer, enters into a contract believing they are getting something different to what they are actually getting, in circumstances where representations from the seller created the false belief.

2. Whether particular conduct is misleading is a question of fact determined in the context of the evidence and to surrounding facts and circumstances.

3. In relation to advertising, the Courts consider that a certain degree of "puffing" or exaggeration is to be expected, usually at the start of the negotiations, for the purpose of attracting the interest of consumers. These become irrelevant or of little significance when more information is exchanged between the parties as negotiations progress.

4. Examples of Court cases of misleading and deceptive conduct in advertising include:

(a) an injuction restrained a pharmceutical company from claims about a new product that was compared with a competitor's product,

(b) an election advertisement claiming that $50 million had been lost due to mismanagement was found to be misleading;

(c) a company who ran a promotion for a free mobile phone included an * next to the word "free" followed by the words "Conditions Apply". Customers had to sign up to a call plan to receive the phone, and this was found to be misleading. (Note the cost of the phone is built into the call plan so the phone is not really "free");

(d) an advertisement for "free local calls" was found to have understated the exclusions and this was insufficient to dispel the impression that all local calls would be free.

Getting back to the builder's package, I haven't seen the sign in question.

A lot depends on whether it is reasonably clear or discoverable at an early stage that conditions apply, and what those conditions are, and whether and when it is made apparent that the model pictured is not the one included for the advertised price (this also happens frequently in car ads). An advertiser can't rely on fineprint if it is too small, not close enough to the ad to be reasonably brought to the consumer's attention etc.

Given the nature of negotiations with builders, ie its not an "on the spot" purchase, usually, more detailed information is exchanged and negotiations ensue before contracts are entered into, its possible the sign in question might be considered mere "puff" to attract interest.

For more information, visit http://www.fairtrading.qld.gov.au/advertising.htm, the website of the Dept of Fair Trading.

Inviting your questions or comments.

Michelle Lember
Partner
Lember And Williams

your team. the LAW team.

Hi Michelle

Thank you for your post, it was really useful.

We have a similar situation with a house and land package, which I would really appreciate your comments and/or views on.

A building company advertised a house & land package INCLUDING a pool at a certain price. The advertisement reads 4 bedrooms, study, etc including pool at $xx,000. When we enquired about the package, the sales person took us to a house and showed us an actual pool, which he said is included in the package (the photo on the advertising material and the actual pool that we viewed had a water feature, which he advised us is an optional upgrade, which was fine). There were no extra fine print on the actual material relating to the pool.

We signed the contracts for the house & they listed the pool as a turn key item with a provisional sum of $xx,000. The provisional sum covers a very basic pool (as was shown to us by the sales person) with no other extras allowed for. You basically get the bare minimum for that amount.

However, after we signed the contract the builder advised us that they don’t actually build pools and they have nothing to do with the pool side of things AND that if we want a pool we have to pay to get the entire pool covered to their standards for health and safety reasons while they build the house. They won’t allow temporary fencing (which they expect us to pay for us well – however it is a cheaper option). The pool has to be built before the house, due to restrictions at getting equipment in to build the pool after the house has been completed. The builders refuse to pay for the cover of the pool.

We think this is false & misleading advertising as they advertise the house comes with a pool. Is this just a “puff” or is it genuinely misleading?

Hi Tink

The use of the term "turn key" is interesting because the ordinary meaning of that expression is "complete/ready to go". For a pool to be turn key it would need to be operational eg to include filters etc. It may not include extras like paving, water features and cleaning equipment. Given that fencing is a statutory requirement, it perhaps ought to include fencing although most builders would exclude that. So it depends on the terms of your contract specifying what was and wasnt included with the "turn key" pool.

It sounds as though you entered into 1 contract with the builder, so even if they have subcontracted the pool to another company, that is builder's concern, not yours.

To say they "have nothing to do with" the pool side of things is incorrect, unless you have contracted directly and separately with the pool company.

I don't have your documents or the benefit of full details, but from what you say, it sounds like you were quoted a fixed price for a turn key pool. Since the house isn't yours until handover, costs incurred along the way by the builder eg pool cover or temporary fencing, are the builder's responsibility and should have been taken into account when they quoted you.

You ought to put your concerns in writing to the builder and require their response in writing within, say, 7 days.

If you still have concerns after that you should seek legal advice and/or approach the Office of Fair Trading via the website I have referred to above.

Regards
Michelle Lember

your team. the LAW team.

Thanks Michelle, we will definitely look into it more as we have tried for two weeks now to communicate with the builder (meetings, letters etc) and they just won't cooperate.