When it comes to selling a business, the process can be
profitable and complicated. Nevertheless, it is critical for both
parties to the transaction to understand how misleading or
deceptive conduct interacts with business sale contracts. Whether
the contract concerns an asset sale, equity sale or merger, caution
must be taken where the contract provides for:
An assurance by the seller as to the veracity of financial
records;
- The production of those financial records;
- Employee information;
- Due diligence clauses; and
- Broad warranties with respect to the future
If the seller resiles from a representation made or withholds
qualifying information to induce purchase, the buyer can rely on
the Australian Consumer Law regime (schedule 2 of the Competition
and Consumer Act 2010 (Cth) (ACL)– in
particular, sections 18 and 29. Sellers should also be aware of
section 4(2) of the ACL, which considers a representation regarding
future matters to be misleading, if no
