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What’s the Difference Between Puffery and Misrepresentation?

What’s the Difference Between Puffery and Misrepresentation?

How do you know if a statement is unlawful or merely exaggerated? Before you rely on a claim that might be too good to be true, read this article.

25th March 2019
Reading Time: 3 minutes

There’s a grey area between a sales pitch and a false or misleading claim. In this grey area, Courts have to distinguish between ‘mere puff’ and a misrepresentation.

This article defines puffery and misrepresentation and outlines the often unclear difference between the two. The law is then outlined to show that judgments in this area are often circumstantial and undefined.

What is Puffery?

Puffery describes a claim that a ‘reasonable’ person would not take seriously. For example, Red Bull’s slogan ‘it gives you wings’ is clearly a wild exaggeration and not meant to be seriously taken… Or is it?

The Red Bull lawsuit

Claiming to provide wings is likely puffery but its implication was allegedly deceptive and fraudulent. A 2013 lawsuit alleged that the slogan implied the drink was a ‘superior source of “energy”‘ which was not backed up by scientific evidence. Evidently, puffery is circumstantial and hard to judge.

Mere Puff

The term puffery comes from the case of Carlill v Carbolic Smoke Ball Company in 1892. The company made an advert claiming to pay £100 to anyone who became sick with influenza after regularly using a smoke ball.
The company deposited £1,000 at a bank to show its seriousness.

Mrs Carlill used the smoke ball three times a day for almost two months before she developed influenza and sued for breach of contract. The Court held that the advert was not ‘mere puff’ but instead a valid offer of contract. The Smoke Ball Company’s advert was thus a misrepresentation.

A ‘reasonable person’ is likely to believe that they would receive £100 and rely on the claim. However, a person relying on a claim they think is true is not enough to be a misrepresentation.

How Does it Differ from Misrepresentation?

Generally, a misrepresentation:

  • is false;
  • gives a misleading impression; and
  • persuades you to do something because of its truthful impression.

A statement itself does not need to be false. For instance, the High Court in Krakowski v Euorlynx found that a representation was false because facts were hidden. Common sense is central to legal reasoning in this area, but common sense is difficult to define.

Some claims are clearly not puffery, such as the words ‘honesty’ and ‘integrity’ in Goldman Sach’s ethical assurances (despite their contrary allegation).

Other claims are unclear. In 2017 the Federal Court found that falsely stating an app has ‘the most property listings in Sydney’ was a misrepresentation. But stating it was the ‘#1 property app in Australia’ was puffery because ‘the best’ has no definite meaning.

The Pepsi Points Case

A case in the US was similar in substance to Carlill v Carbolic Smoke Ball Company. Pepsi had a point system to redeem prizes and had an advert that displayed a military jet worth 7 million Pepsi Points.

A man bought the points (about $700,000) and went to Pepsi to collect his jet. The Judge said the commercial was obviously puffery. A reasonable person, he said, would not take an advert that showed a $23 million jet for $700,000 seriously.

What Does the Law Say?

Australian Consumer Law (ACL) prohibits false and misleading claims. The ACL doesn’t extend the common sense reasoning by courts much further.

Section 29 essentially states that a person must not make a false or misleading representation, in trade or commerce, that:

  • goods are of a particular quality;
  • goods are new;
  • a specific person likes or has the product;
  • the goods are from a certain place;
  • there’s a need for the product;
  • some warranty or right exists; or
  • that something must be paid for.

These laws don’t tell you what to look out for. So you’re relied on to determine whether a claim is a misrepresentation or mere puffery.

Final Thoughts

Puffery inhabits the space between commercials in jest and false representation. Telling the difference between the two is difficult. Even courts use common sense reasoning to judge if a claim is puffery or a misrepresentation.

We mentioned that the lack of regulation in consumer law is problematic for consumers in a previous article. The difference between puffery and misrepresentation is not always a matter common-sense.

As a result, consumers can rely on statements they believe to be truthful, suffer harm and a court may still define such statements as puffery. It’s up to you look at the context of a claim and take care before relying on it.

Unsure where to start? Contact a LawPath consultant on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from  Australia’s largest legal marketplace.

Author
Shaheen Hoosen

Shaheen is a Legal Tech Intern at Lawpath as part of the Content Team. He is in his final year of a Bachelor of Laws with the degree of Bachelor of Information Technology (Major in Information Systems and Business Analysis) at Macquarie University. He is interested in IT Law and Access to Justice.