1. 2-1 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev This is the prescribed textbook for your course. Available NOW at your campus bookstore!

2. 2-2 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Advertising law Chapter 24

3. 2-3 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev 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.

4. 2-4 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Introduction Advertising is a critical element in the marketing of goods and services. Advertising tells consumers about goods and services.

5. 2-5 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev 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

6. 2-6 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev 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

7. 2-7 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev 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

8. 2-8 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev 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.

9. 2-9 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev 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.

10. 2-10 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev 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

11. 2-11 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev 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.

12. 2-12 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev Advertising Federation of Australia Code of Practice Statement of ethics Code of practice (for member agencies’ relationship)

13. 2-13 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev 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)

14. 2-14 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev 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

15. 2-15 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev 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?

16. 2-16 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev 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

17. 2-17 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev 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

18. 2-18 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev 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.

19. 2-19 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev 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.

20. 2-20 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev 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

21. 2-21 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev 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.

22. 2-22 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev 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.

23. 2-23 Copyright © 2014 McGraw-Hill Education (Australia) Pty Ltd PPTs to accompany Barron, Fundamentals of Business Law 7Rev 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.