Misleading and Deceptive Conduct Under the ACL in High-Value Victorian Commercial Transactions 

In high-value commercial transactions in Victoria, particularly mergers and acquisitions, shareholder exits, and complex asset sales, disputes often arise where one party alleges misleading deceptive conduct ACL Victoria commercial. Sophisticated parties may assume that detailed contracts and due diligence processes provide complete protection. However, under s18 Australian Consumer Law, liability can arise even before the agreement is signed. Representations made during negotiations, omissions, or even silence as misleading conduct can expose vendors, directors, and advisers to significant risk. 

For corporate clients, investors, and business owners, the stakes are substantial. A misstatement about financial performance, undisclosed liabilities, or overly optimistic M&A representations can trigger claims where the counterparty asserts reliance and causation, seeking substantial damages under s236. Importantly, these claims often sit alongside broader commercial litigation disputes, including breaches of directors’ duties or equitable claims. 

This article addresses a critical question for Victorian businesses: when does conduct in a commercial transaction cross the line into misleading or deceptive conduct under the ACL, and what are the real legal consequences in high-value deals? 

How does misleading or deceptive conduct work under the ACL in Victoria?

The legal foundation for misleading deceptive conduct ACL Victoria commercial claims is found in section 18 of the Australian Consumer Law (ACL), which is contained in Schedule 2 of the Competition and Consumer Act 2010 (Cth). Section 18 provides that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. This is a broad, principles-based provision that applies equally to high-value commercial transactions, including sophisticated business dealings. 

Importantly, liability under s18 Australian Consumer Law does not require proof of intention to mislead. The focus is on the effect of the conduct on the target audience, which in commercial contexts may include experienced investors or corporate entities. Courts assess the entire course of conduct, including statements, documents, and omissions during negotiations. 

A key High Court authority is Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60. In that case, the Court emphasised that liability depends on whether the representor has adopted or endorsed the misleading information. This is particularly relevant in M&A transactions where advisers, agents, or intermediaries communicate information prepared by others. It highlights that not every incorrect statement will attract liability, especially where disclaimers are clear and effective. 

Another significant principle arises from cases such as Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988), where the court confirmed that silence as misleading conduct can breach section 18 where there is a reasonable expectation of disclosure. In high-value commercial negotiations, partial disclosures or “half-truths” can therefore create liability if they distort the overall impression. 

To succeed in a claim, a plaintiff must establish reliance and causation, meaning they relied on the misleading conduct and suffered loss as a result. If proven, remedies are available under section 236 of the ACL, allowing the court to award damages under s236 for loss or damage caused by the contravention. 

In practice, this framework means that even sophisticated commercial parties in Victoria must carefully manage representations throughout a transaction. Courts will look beyond contractual wording to the substance of pre-contractual conduct when determining whether misleading or deceptive conduct has occurred. 

How do courts assess misleading or deceptive conduct in commercial transactions?

What conduct will be considered misleading or deceptive? 

Courts assess misleading deceptive conduct ACL Victoria commercial claims by examining the overall impression created by a party’s conduct. This includes statements, omissions, and the broader transactional context. Even technically accurate statements may be misleading if they create a false commercial impression. 

In high-value transactions, issues often arise where financial forecasts, assumptions, or M&A representations are presented without adequate qualification. Courts are particularly concerned with “half-truths”, where selective disclosure distorts reality. In this context, silence as misleading conduct becomes critical. If a party is aware that the counterparty is operating under a mistaken assumption, a failure to correct it may amount to misleading conduct. 

How do courts assess reliance and causation? 

To succeed, a claimant must establish reliance and causation. This means proving that the misleading conduct was a real factor in their decision to proceed with the transaction and that it caused their loss. 

In commercial disputes, defendants frequently argue that sophisticated parties relied on their own due diligence rather than any representations. However, courts recognise that reliance does not need to be exclusive. It is sufficient if the conduct materially contributed to the decision-making process. 

Courts will closely examine contemporaneous evidence, including internal communications and transaction documents, to determine whether the representation influenced the outcome. Assertions that a party did not rely on the conduct are tested against the commercial reality. 

Does due diligence prevent ACL liability? 

Due diligence is important, but it is not a complete defence under s18 Australian Consumer Law. Courts have consistently held that a misleading representation can still give rise to liability, even where the purchaser conducted extensive investigations. 

This is particularly relevant where there is an imbalance in access to information. If the vendor controls key data or fails to disclose material facts, the due diligence process may not cure the misleading impression. However, the depth and quality of due diligence can affect how courts assess reliance and causation. 

Are disclaimers and non-reliance clauses effective? 

Contractual protections such as disclaimers and non-reliance clauses are relevant but not determinative. Courts will consider whether these provisions are clear and consistent with the parties’ conduct throughout the transaction. 

If the overall conduct is misleading, standard form disclaimers may carry limited weight. This reflects the broader principle that statutory protections under the ACL cannot easily be displaced by contractual wording alone. 

What remedies are typically awarded? 

Where a contravention is established, courts may award damages under s236 to compensate for loss caused by misleading conduct. In high-value transactions, this often involves complex valuation evidence, including the difference between the represented and actual value of the business. 

These claims frequently arise alongside broader commercial litigation disputes, reinforcing the need for careful management of representations throughout the transaction lifecycle. 

What disputes arise in high-value commercial transactions?

In practice, misleading deceptive conduct ACL Victoria commercial disputes frequently arise in structured sale processes where vendors tightly control the flow of information through information memoranda and data rooms. A recurring issue is the presentation of earnings and forward projections that do not reflect the underlying financial position of the business. Courts have consistently scrutinised these types of M&A representations, particularly where projections lack reasonable foundation or omit qualifying assumptions, creating a misleading overall impression. 

Another well-established area of dispute involves the non-disclosure of material risks. This includes known regulatory issues, customer concentration risks, or operational instability that are not apparent from disclosed materials. Courts have long recognised that silence as misleading conduct can arise in these circumstances. In Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd, the court confirmed that failing to disclose information can be misleading where it creates a false impression, even if no express statement is made. This principle is frequently applied in high-value commercial transactions where one party has superior knowledge. 

Shareholder and investment disputes also frequently involve misleading conduct allegations. Incoming investors often challenge representations about governance, financial controls, or the conduct of existing directors. These matters commonly extend into broader claims involving misuse of company funds or breaches of duty, including director misuse, requiring a coordinated commercial litigation strategy. 

From an evidentiary perspective, disputes regularly turn on materials generated during the transaction process rather than the final agreement itself. Management presentations, email correspondence, and due diligence responses are routinely analysed to establish reliance and causation. Courts have made clear that the substance of communications will prevail over form, particularly where informal statements contradict contractual protections. 

Importantly, these disputes often arise despite the presence of detailed contractual safeguards. Entire agreement and non-reliance clauses are frequently tested, but their effectiveness is limited where the conduct itself is misleading. As reflected in Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60, the question is whether a party has adopted or endorsed the representation, not simply whether disclaimers exist. 

For high-value clients, the pattern is consistent. The greatest exposure to damages under s236 arises not from the wording of the final contract, but from the way the transaction is conducted in practice. 

What should you consider before pursuing or defending a misleading conduct claim?

In misleading deceptive conduct ACL Victoria commercial disputes, early strategic assessment is critical. These matters are rarely determined by the existence of a misleading statement alone. Instead, outcomes often turn on whether the evidence clearly establishes reliance and causation in the context of the transaction. 

For claimants, the focus should be on proving that specific M&A representations materially influenced the decision to proceed. Courts place significant weight on contemporaneous records such as board minutes, investment papers, and due diligence summaries. Without this evidentiary foundation, even strong allegations may not succeed. 

For defendants, the strategy centres on breaking the causal link. This may involve demonstrating that the claimant relied on independent advice, identified risks during due diligence, or had access to information inconsistent with the alleged representation. Evidence of independent commercial judgment can significantly weaken a claim. 

A key consideration is the range of available remedies. While claims are commonly brought under the ACL, parties may also pursue equitable relief where fiduciary obligations arise, including claims for equitable compensation. 

These disputes require a disciplined, evidence-led approach. Early identification of evidentiary strengths and weaknesses allows parties to assess exposure to damages under s236 and develop a strategy aligned with the commercial realities of the transaction. 

Frequently Asked Questions About Misleading or Deceptive Conduct (ACL)

Misleading or Deceptive Conduct in Commercial Transactions: What You Need to Know

In high-value transactions, misleading deceptive conduct ACL Victoria commercial claims are rarely straightforward. Courts look beyond the contract to the substance of the transaction, including M&A representations, disclosure practices, and whether reliance and causation can be established. For businesses and investors, the legal and financial exposure can be significant, particularly where claims for damages under s236 are involved. 

If you are navigating a dispute or want to mitigate risk before entering a transaction, obtaining early legal advice is critical. Our team at Pentana Stanton Lawyers provides strategic guidance across complex commercial litigation matters, including misleading or deceptive conduct claims. 

To understand how these disputes are handled in practice, explore our commercial litigation services or book a confidential consultation to assess your position and next steps.