BUS503 BUSINESS LAW AND ETHICS: case study

This case study discusses the advertising and selling practices in business law and ethics, focusing on the obligations of businesses to justify their brand names and ensure their sales practices are in accordance with the ACL act.

Running Head: BUS503 1
BUS503 BUSINESS LAW AND ETHICS: case study
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BUS503 2
Introduction
Advertising and selling practices have evolved rapidly over the years. These practices
do not occur solely through newspapers, televisions or billboards. Nowadays, these activities
occurs through brand names or the online environment. Businesses that operate using names
similar to other businesses have the obligation to justify their position as to whether the name
is not misleading (Faure, Ogus, & Philipsen, 2007). Nowadays, businesses are forced to
ensure that their sale practices are in accordance with the ACL act. Good sale practices lead
to consumer satisfaction and a more successful business. The rights and responsibilities set
out in section 18 of the ACL Act are aimed at ensuring businesses are operating on a
fairground and selling quality products and services to consumers.
Discussion
When deciding whether William Abong's conducts are misleading or deceptive, the
most fundamental question is whether the overall impression created by his new brand name
is false or inaccurate. While William Abong is not required to disclose any information in all
circumstances, “Billabong Limited” should seek further information to avoid any allegations
of misleading customers. He should disclose further details of the name to Billabong
Australia Ltd since it is likely that William’s conducts are creating a misleading impression to
the consumers.
Section 18(1) of the ACL indicates that persons or corporations must not involve
themselves in business conducts that are deemed confusing or deceptive, or are likely to
mislead or deceive consumers (Australian Consumer Law, 67). Further, beyond applying to
all persons generally, this sections is also applicable as a commonwealth statute to the
conduct of businesses (s18 (2), ACL). That being said, the section simply imposes the
necessary standards on the market place. Further remedies such as injunctions, rescission of

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contract among other actions can be found elsewhere in the act and thus this piece has had a
significant impact on Australian business. It has produced a wide range of case laws and
although section 18 appears in the ACL, this section is not limited to consumer trades or
dealings (Paterson, & Brody, 2015). Most of the cases on misleading conducts like the case
of William Abong and Billabong Australia Ltd are often business-business cases. This is a
fundamental law that can be used by consumers when they have been persuaded by a seller to
purchase a certain product that later turns out to be inaccurate. The available remedies for
misleading conducts are in addition, independent in case consumer guarantees are breached
(Hodges, 2015).
The concept of misleading or deceptive conducts in the case of William Abong and
Billabong Australia Ltd is taken at face value by court. Misleading conducts necessitate an
objective to deceive and so is of little importance because proving evidence of fraud in court
is a bit challenging. However, misleading as in this case does not require intentions or a
certain state of mind from the key actor. In fact, the restrictions of misleading conducts
impose huge liabilities not to knowingly or unknowingly lead others into errors through any
form of commercial transactions. This explicitly provides that an innocent brand name might
generate liability.
In the case of “William Abong” and “Billabong Australia Ltd”, it is not justifiable for
William Abong to use the name on the fact that both businesses are in the same industry.
Remember, the guiding principles under the Australia Consumer law section 18 (2) “do not
confuse the consumers.” Therefore, it is very likely that the consumers of Billabong Australia
Ltd will be confused because they have almost similar names. One of the key factors to
examine is the possibility of consumer confusion and whether the two businesses are in the
same industry. In this case, the two businesses are in the same industry but dealing with
different consumer products. A good example is the case of Apple Corps v. Apple Inc. These

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two major companies were battling for the “apple” trademark for years. The Beatles had
established the Apple Corps music a decade earlier before the founding of Apple Inc. By
Steve Jobs. When the later was sued by the Beatles, he agreed not to enter the music industry
and paid a cash penalty. Nevertheless, Apple Inc. was sued again after the introduction of
iTunes .The settlement was made when Jobs agreed to buy the trademark from the Apple
Corps (Kolivos, and Kuperman, 2012).
According to Section 18 (3), “Billabong Australia Ltd” is justified to seek a legal
interpretation on the grounds that the other business is in the same industry (William Abong
Pty Ltd). Moreover, the other business is in the same geographical market. The deceptive use
of competitor’s brand name in such circumstances can amount to trademark infringement.
The act indicates that trademark application and the resultant registration is valid and cannot
be corrected if the application of the trademark was earlier filed as the name of another
company (Nottage, 2009). Another classic example is the case of Optical 88 ltd v optical 88
Pty Ltd [2010] FCA 1380 [2011] fcafc 130. 88oz’s use of Optical 88 was misleadingly the
same, and thus it infringed 88HK's key trademark but the references were presented to defeat
the claim of 88HK. In evaluating the deceptive correspondence in composite word marks, the
elements of the words should not too readily be presumed to be essential or disgusting
features (Corones, 2010).
Whether William Abong’s conduct is misleading depends on the specific
circumstances of the case. This implies that all the fundamental circumstances should be
taken into consideration in accordance with section 18 of ACL. This includes the entire
advertisement, products packaging and any statements that might have been made by William
Abong relating to the products and the name. Whether the conducts are misleading or not, it
must be considered within the context of consumer classes who might possibly be affected by
the conducts (Kariyawasam, & Wigley, 2017). The effect of William Abong’s conducts can

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only be assessed against the ordinary member of the relevant class of consumers. It is the
actions of the business that matter and not is intentions. Any business can conduct deceptive
or misleading activities without intending to.
William Abong’s business gave the false impression that the clothing lines were
distributing, or were associated with Billabong Australia Ltd. This shows that a business
might fall foul of section 18 irrespective of whether their intention was to mislead the
consumer. Unlike passing off and misleading conducts, trademark infringement not
necessitate Billabong Australia Ltd to show reputational damage or proof that the name used
by William Abong was misleading consumers ( Svantesson, & Clarke, 2013). William Abong
infringed on Billabong Australia Ltd when the two names were deceptively similar.
Bozzi, (2015) indicates that whether a business name is misleading contrary to section
18 of the ACL should, as suggested by the arguments of the section, be reviewed by reference
to the sent impression by the company in the circumstance in which it infringes another
business, and not just by reference to the existing technically accurate evidence available to
the consumers. This approach , together with the fact that the punitive actions for
contravening s. 18 is aimed at genuine deterrence of such wrong behavior , is consistent with
the purpose of protecting consumers from being misled or purchase substandard goods.
Consumers will possibly still be entitled under the consumer guarantee to a refund or
replacement while the seller's warranty does not apply (Paterson, 2011).
The “do not mislead” principle requires William Abong Pty Ltd to carry out its
operations in an honest and forthcoming in what it does commercially. This would promote
best practices. The company’s products ought to be sold on their merits and not by the virtue
of a smoke-and-mirrors approach. This principle is applicable to all commercial dealings.
(Adams, & Nehme, 2011). It is not just the business name that can potentially mislead

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consumers, selling of products by William Abong Pty Ltd, and packaging where a message
was sent to create a different impression on the part of the recipient can also be considered as
misleading. Since William Abong Pty Ltd broke the principle under section 18 of the ACL,
William Abong might be sued and made the subject of orders for damages to the Billabong
Company (Hodges, 2015). However, Billabong Pty Ltd can apply the available authorisation
processes to seek potential legal protection against any consequences of William Abong Pty
Ltd, breaching of ACL prohibitions. Therefore, Billabong Australia Ltd must be able to show
that the public detriments due to William Abong’s conducts are outweighing the public
benefits. These guidelines are actually covered by the anti-competition provisions of the
ACL, as technically is the conduct that restricts competition rather than a breach of fair sale
practices (Ramsay, 2012).
Conclusion
William Abong Pty Ltd might be a fair and ethical business, giving excellent products
to clients and are quite unlikely to engage in a breach of section 18 of the ACL. However, it
is important for the company to understand the consequences of such a breach can be.
Billabong Pty Ltd can seek damages incurred up to six years after the conducts occur. The
ACL is involved in a range of business protection legal actions .This would allow Billabong
Pty Ltd to take their own independent legal action and later seek injunctions from the court .

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References
Australian Consumer Law (n 67) s 18(1). Competition and Consumer Law Act 2010 (Cth)
sch 2 ('Australian Consumer Law')’
Adams, M., & Nehme, M. (2011). Consumer Law: No New Specific Legislation Required to
Deal with'Greenwashing'. Keeping good companies, 63(7), 419.
Bozzi, C., 2015. CONSUMER GUARANTEES. Australian Commercial Law, p.402.:
Corones, S. (2010). Consumer Guarantees in Australia: Putting an End to the Blame Game.
QUT Law Review, 9(2).
Faure, M., Ogus, A., & Philipsen, N. (2007). Enforcement practices for breaches of consumer
protection legislation. Loy. Consumer L. Rev., 20, 361.
Hodges, C. (2015). Corporate Behaviour: Enforcement, Support or Ethical Culture?.
Retrieved from: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2599961 SSRN
Electronic Journal.
Kariyawasam, K., & Wigley, S. (2017). Online shopping, misleading advertising and
consumer protection. Information & Communications Technology Law, 26(2), 73-89.
Kolivos, E. and Kuperman, A., (2012). Consumer law: Web of lies-legal implications of
astroturfing. Keeping good companies, 64(1), p.38.
https://search.informit.com.au/documentSummary;dn=980294545823385;res=IELAP
A
Nottage, L., (2009). Consumer law reform in Australia: Contemporary and comparative
constructive criticism. Queensland U. Tech. L. & Just. J., 9, p.111.
https://heinonline.org/HOL/LandingPage?handle=hein.journals/qutlj9&div=14&id=&
page=

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Paterson, J. M., & Brody, G. (2015). “Safety net” consumer protection: using prohibitions on
unfair and unconscionable conduct to respond to predatory business models. Journal
of consumer policy, 38(3), 331-355.
Paterson, J. (2011).The new consumer guarantee law and the reasons for replacing the
regime of statutory implied terms in consumer transactions. Melb. UL Rev., 35, p.252.
Ramsay, I. (2012). Consumer law and policy: Text and materials on regulating consumer
markets. Bloomsbury Publishing.
Svantesson, D., & Clarke, R. (2013). The Trade Practices Act: A Hard Act to Follow: Online
Consumers and the New Australian Consumer Law Landscape. James Cook UL
Rev., 20, 85.

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