Blog / Winning Business
Jo-Anne Hamilton, The M Word
Misrepresentation and the commercial agent.
Negotiation is the foundation on which the success of a commercial agent stands. As agents, we stand between two parties attempting to maximise a deal in their own favour. Whilst our fiduciary duty as agent is to act in our client’s best interests, the General Rules of Conduct for agents make it clear that we owe the other party a duty to act honestly, fairly and professionally and must not mislead or deceive any parties in negotiations or a transaction. With the advent of a new regime of consumer protection law, and recent court outcomes, there is now even more focus on unfair trading in the commercial sector, in particular on issues related to misrepresentation and misleading conduct.
Effectively, when acting as an agent, everything you say or do is a ‘representation’. For example, whenever you are asked a question, what you say to answer it, or even what you don’t say in response, is a representation. Australian Consumer Law (ACL) makes it unlawful to make statements in trade or commerce that are misleading or deceptive, or would be likely to be so. Many valuable lessons can be learnt from recent court cases such as EK Nominees Pty Ltd vs Woolworths Ltd. Woolworths entered into prolonged negotiations with EK Nominees to lease a site for a new supermarket. However, when Woolworths later decided they no longer wanted to proceed, they did not disclose this to the other party. The court equated Woolworths remaining silent with failing to disclose its changed position, thus encouraging EK Nominees to continue working on the project to their financial detriment. Woolworths were found guilty of misleading and deceptive conduct and were ordered to pay damages to EK Nominees for its wasted expenditure of over $700,000 as well as equitable compensation in excess of $1.1 million. As a professional, you are expected to exercise a higher degree of skill and diligence than a non-professional and, as an agent, you have a duty of care to anyone who may be affected by your act or omission. Remember that a statement that is literally true may still be misleading if it only tells half the truth, if it conveys a second meaning that is misleading, if it conveys a false impression, or if subsequent events render it false or misleading. Even an expression of your opinion may be misleading if there are no reasonable grounds to support the opinion or there are important assumptions underlying the opinion or qualifications to which it is subject that are not expressed. So, in the increasingly litigious commercial environment, how can you avoid misrepresentation? Never act outside the area of your expertise. Whenever presenting information or giving advice, know what hat you are wearing, and recognise when to ask for help from another professional or recommend the use of services from other professionals. Document your files; vigilantly keep notes of all your phone conversations and meetings. Record not just what was discussed, but also when and where you discussed it, and who was present at the time or who may be able to verify what you said during the discussion or the meeting. If you follow this advice, and you still encounter legal issues with a party, possibly years after the transaction, they may operate on their selective memory – but you will have documentation on the specific advice and counsel you gave them (admissible evidence). It also helps you remember what you did and what you said. Use confirming letters and emails to summarise key points (as well as any agreements or assumptions) in writing, as well as using chronological log entries in your diary, files and mobile phone logs. In commercial negotiations, you need to take into account what has been represented to the parties and what expectations are involved. Treat every transaction as if you might get sued and always work from a defensible position since you may very well find that you will need to defend the position you took! Whilst keeping you out of the courts, fair business practices ensure that while genuine competition occurs, consumers are protected, which in turn leads to greater trust and better business reputation.
The content of this article is intended as general information. Kaplan recommends you seek specialist advice on your specific circumstance. Written by Jo-Anne Hamilton, Curriculum Specialist, Real Estate, Kaplan Professional.
Kaplan is excited to introduce a new CPD elearning session for Commercial Agents called ‘Misrepresentation and the Acts’. The course provides participants with essential knowledge relating to misrepresentation and a practical understanding of relevant acts such as the Australian Consumer Law, Competition & Consumer Act 2010, and the Property Stock & Business Agents Act 2002. You can book into this course by contacting Kaplan on 1300 798 006 or by visiting www.kp.edu.au/re.
Jo Hamilton recently joined Kaplan Professional as a Curriculum Specialist for Real Estate learning resources. She has three decades of experience in the real estate sector, and two decades in tertiary education. Jo also runs a successful consultancy business in property-related training services and the production of hands on, interesting, and practical learning resources.
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