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Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd
PPTs to accompany Barron, Fundamentals of Business Law 7Rev
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Advertising law
Chapter 24
Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd
PPTs to accompany Barron, Fundamentals of Business Law 7Rev
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Learning objectives
At the end of this chapter you should
understand:
• the nature and impact of advertising on the market place
• the significance of advertising on consumer demand
• the role of the Australian Association of National
Advertisers
• the contents of the Advertiser Code of Ethics
• the role and function of the Advertising Standards Board
and the Advertising Claims Board
• the statutes that regulate advertising practices
• the common-law principles that regulate advertising
practices and their relationship to self-regulation.
Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd
PPTs to accompany Barron, Fundamentals of Business Law 7Rev
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Introduction
• Advertising is a critical element in the
marketing of goods and services.
• Advertising tells consumers about goods
and services.
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PPTs to accompany Barron, Fundamentals of Business Law 7Rev
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Benefits of advertising activity
• Provides information that consumers need to
make appropriate choices regarding the
goods and services they will acquire
• May allow new competitors to enter the
market
• Provides employment to many in the creative
industries
• May be entertaining
Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd
PPTs to accompany Barron, Fundamentals of Business Law 7Rev
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Disadvantages of advertising
• Without regulations:
– Can provide false information
– May discourage smaller competitors from
entering the market
– Can offend the public
– May invade privacy
– Can be defamatory
– Can infringe on intellectual property
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PPTs to accompany Barron, Fundamentals of Business Law 7Rev
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Advertising self-regulation
• Advertising Standards Bureau Ltd
• AANA Advertiser Code of Ethics
• AANA Code of Advertising to Children
• Federal Chamber of Automotive Industries Voluntary
Code of Practice for Motor Vehicle Advertising
• The Advertising Standards Board
• The Advertising Claims Board
• Advertising Federation of Australia Code of Practice
Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd
PPTs to accompany Barron, Fundamentals of Business Law 7Rev
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AANA Advertiser Code of Ethics
A voluntary code to ensure that all
advertisements are legal, decent, honest
and truthful, and that they have been
prepared with a sense of obligation to the
consumer and society, and a fair sense of
responsibility to competitors.
Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd
PPTs to accompany Barron, Fundamentals of Business Law 7Rev
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AANA Code of Advertising to
Children
• Object is to ensure that advertisers develop and maintain a high
sense of social responsibility in advertising to children in
Australia
• Matters dealt with include:
– avoidance of advertising which sexualises children
– safety
– parental authority
– social values
– alcohol
– food and beverages
– placement of advertising away from unsuitable
communication.
Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd
PPTs to accompany Barron, Fundamentals of Business Law 7Rev
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The Advertising Standards Board
• Maintains standards of taste and decency in
advertising
• Comprising members of the public who are
chosen to reflect current community
standards
• Can request modification or discontinuance
of the advertisement
• If non-compliance with request, can refer
case report to the appropriate government
agency or forward the case report to media
proprietors
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PPTs to accompany Barron, Fundamentals of Business Law 7Rev
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The Advertising Claims Board
• Alternative dispute resolution for:
– Truth and accuracy of advertising
– Breaches of AANA Advertising Code of
Ethics
• The benefits of this system are that it
reduces the cost and time involved in
court proceedings.
• Composed of variable panels of people
chosen from the Advertising Standards
Bureau Register of Legal Practitioners.
Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd
PPTs to accompany Barron, Fundamentals of Business Law 7Rev
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Advertising Federation of
Australia Code of Practice
• Statement of ethics
• Code of practice (for member agencies’
relationship)
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PPTs to accompany Barron, Fundamentals of Business Law 7Rev
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Other voluntary codes
regulating advertising
• Direct marketing:
– ADMA Code of Practice
– Australian Press Council
– Australian Broadcasting Authority
– Federation of Australian Radio
Broadcasters (FARB)
– Federation of Australian Commercial
Television Stations (FACTS)
Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd
PPTs to accompany Barron, Fundamentals of Business Law 7Rev
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ADMA Code of Practice
• Advertising Direct Marketing Association
(ADMA) Code of Practice provides rights
for consumers:
– Seven-day cooling-off period
– Independent code authority with consumer
representatives
– Adoption of National Privacy Principles established
by the federal Privacy Commissioner
– Imposition of limits on telemarketing
– Compulsory use of a system that allows
consumers to register their decision not to receive
direct marketing offers from ADMA members
Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd
PPTs to accompany Barron, Fundamentals of Business Law 7Rev
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Statutory regulation of advertising
—Australian Consumer Law
• ACL Section 18: prohibition on misleading and
deceptive conduct or conduct likely to mislead and
deceive by persons engaged in trade or commerce
• Relevant examples may include:
– comparative advertising
– use of celebrities in advertising
– similar or identical brands or business names.
•
Matters to consider:
– What is the relevant target audience of the advertisement?
– What message is being conveyed to the target audience?
– Is the message true or false?
Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd
PPTs to accompany Barron, Fundamentals of Business Law 7Rev
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Australian Consumer Law—
Section 29: false representations
• ACL Section 29: prohibition on making false or
misleading representations in connection with
the supply or possible supply or promotion of
goods and services
– S29(1)(a)& (b)—that goods or services are of a
particular standard, quality, value or grade
– S29(1)(c)—that goods are new
– S29(1)(e)&(f) —concerning testimonials or
purported testimonials relating to the goods or
services
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PPTs to accompany Barron, Fundamentals of Business Law 7Rev
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Section 29—false representations
(cont.)
– S29(1)(h) —that a person/corporation has a
sponsorship, approval or affiliation they do not have
– S29(1)(i) —with respect to price of the goods or
services
– S29(1)(k) —with respect to place of origin of the
goods
– S29(1)(l) —concerning the need for any goods or
services
– S29(1)(m) —concerning the existence, exclusion or
effect of any condition, warranty, guarantee, right or
remedy
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PPTs to accompany Barron, Fundamentals of Business Law 7Rev
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Australian Consumer Law (cont.)
• ACL Sections 33 & 34: prohibition on
conduct that is likely to mislead the public as
to the nature, the manufacturing process,
characteristics and suitability for their
purpose or quantity of any goods or services
by a person in trade and commerce
• Remedies for breaches of the ACL
provisions may include injunctions, corrective
advertising orders, substantiation notices,
and damages.
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PPTs to accompany Barron, Fundamentals of Business Law 7Rev
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Bait advertising
• Section 35 of the Australian
Consumer Law
• Occurs when goods or services are
advertised at a particular price and
the advertiser is not able to supply
the goods and services in
reasonable quantities for reasonable
periods of time.
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PPTs to accompany Barron, Fundamentals of Business Law 7Rev
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The common law and advertising
• Law of contract:
– Breach of contract (where purchaser can show he or
she entered a contract based on a false statement)
• Law of torts:
– Tort of deceit
– Negligence
– Tort of injurious falsehood
– Passing off
– Defamation
• Right of privacy
• Right of publicity
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PPTs to accompany Barron, Fundamentals of Business Law 7Rev
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Tort of deceit
• The representation made in the
advertisement is one of fact and not an
opinion, prediction or promise.
• The representation is false.
• The representation induces the plaintiff
to enter into a contract.
• The advertiser made the representation
knowing it to be untrue, or was reckless
as to its truth.
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PPTs to accompany Barron, Fundamentals of Business Law 7Rev
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Tort of injurious falsehood
• Slander of goods:
– A false statement is made about the plaintiff.
– The statement is disparaging of the plaintiff’s
goods or services, or method of carrying on a
business, or title to property.
– The statement is made maliciously.
– The plaintiff suffers, or is reasonably likely to
suffer, a loss of business.
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PPTs to accompany Barron, Fundamentals of Business Law 7Rev
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Passing off
The tort of ‘passing off’ is committed
where one trader causes customers
and potential customers to incorrectly
associate their products or business
with those of another trader or
person.
Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd
PPTs to accompany Barron, Fundamentals of Business Law 7Rev
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