Under the Fair Trading Act 1986, which statement about advertising a property for sale is correct?
Correct Answer
B) Every statement, in any medium, must be accurate and not misleading or deceptive
The Fair Trading Act requires that all representations in trade, including property advertisements, must not be false or misleading. This applies to all forms of advertising and includes both factual statements and representations that could mislead consumers about the property's characteristics or value.
Why This Is the Correct Answer
Sections 9 and 14 of the Fair Trading Act prohibit misleading or deceptive conduct and false representations about land in trade, in any medium. Everything an agent says or publishes about a property must be accurate and not likely to mislead.
Why the Other Options Are Wrong
Option A: Minor inaccuracies are acceptable so long as they do not affect the sale price
The test is whether the representation is likely to mislead, not whether it moves the price; a small but material error can still breach the Act.
Option C: Opinions about the property's features are exempt from the Act in every case
An opinion can be misleading if it is not honestly held or has no reasonable basis, so opinions are not automatically exempt.
Option D: Only written advertisements are covered, so spoken claims at open homes are exempt
Section 9 covers conduct of any kind in trade, including what is said at open homes and over the phone.
Deep Analysis of This Compliance Question
The Fair Trading Act 1986 is fundamental consumer protection legislation that applies comprehensively to all commercial conduct, including real estate advertising. This question tests understanding of absolute standards required in property marketing. The Act prohibits misleading or deceptive conduct in trade, with no exceptions for 'minor' inaccuracies or subjective opinions when they could mislead consumers. This principle protects buyers from making decisions based on false information, regardless of whether the seller intended to deceive. The Act's broad scope covers all advertising mediums - written, verbal, digital, and visual representations. For real estate agents, this creates strict liability for accuracy in all marketing materials, from basic property details to lifestyle representations. Understanding this helps agents avoid costly Fair Trading Act breaches and maintains public trust in the profession.
Background Knowledge for Compliance
The Fair Trading Act 1986 prohibits misleading or deceptive conduct in trade (s 9) and false or misleading representations about land (s 14). It covers every medium: print, online, signage, photos and spoken statements. The Commerce Commission enforces it, offences are strict liability, and companies face fines of up to $600,000.
Memory Technique
Think of a TRUTH check on every claim: is it true, and would the overall impression lead a reasonable buyer astray? Size, rooms, views and condition are facts to verify before they go into any ad or conversation.
When you see Fair Trading Act questions about advertising standards, immediately think 'TRUTH' - there are no exceptions, no 'minor' allowances, and no exemptions for opinions or different media types.
Exam Tip for Compliance
For Fair Trading Act questions, look for absolute language like 'all statements must be accurate.' Reject any options suggesting exceptions for minor inaccuracies, opinions, or specific advertising types.
Real World Application in Compliance
An agent advertises a property as '200m² floor area' when it's actually 185m². Even though this seems minor and doesn't affect the buyer's decision, it breaches the Fair Trading Act. The Commerce Commission could prosecute, and the buyer could seek damages. The agent should have measured accurately or used qualified language like 'approximately 200m² (to be confirmed)' to avoid liability.
Common Mistakes to Avoid on Compliance Questions
- •Thinking minor inaccuracies are acceptable
- •Believing opinions are always exempt from the Act
- •Assuming only written advertisements are covered
- •Not understanding strict liability applies regardless of intent
Related Topics & Key Terms
Key Terms:
More Compliance Questions
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- → Which statement best describes the trust account requirements under the Real Estate Agents Act 2008?
- → An agency's trust account reconciliation reveals that interest earned on client deposits has been retained by the agency rather than distributed to clients. This practice is:
- → According to trust account regulations, how long must real estate agencies retain records of trust account transactions?
- → What is the primary purpose of the Consumer Guarantees Act 1993 in relation to real estate services?
- → Under the Consumer Guarantees Act 1993, if a real estate agent fails to exercise reasonable care and skill when marketing a property, what remedy might be available to the client?
- → A real estate agency's trust account shows a shortage of $5,000 during a routine audit. What is the most serious disciplinary order available under the Real Estate Agents Act 2008?
- → A real estate agent advertises a property as having a 'new roof' when they know it was repaired but not replaced. A buyer purchases based on this information and later discovers the truth. Which Acts could potentially apply to this situation?
- → Which statement best describes the primary purpose of trust accounts in real estate transactions?
- → A property advertisement states 'Guaranteed rental return of 8% per annum', although no one has contracted to pay that return. Under the Fair Trading Act 1986, this statement is:
- → How long must real estate agencies retain AML/CFT compliance records after a business relationship ends?
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