It is common practice to advertise goods or services at a low price and/or with a stated discount. Often this will be reinforced by noting the goods or services are “limited stock” or “while stocks last”.  Such statements in advertising are a useful marketing tool because they can create urgency for the consumer.

However suppliers must be careful when advertising in this way as if care is not taken such advertising may be considered bait advertising under the Fair Trading Act 1986 (“FTA”) . Bait advertising under the FTA is the making of false or misleading representations about the availability of advertised goods or services and is unlawful. Suppliers breaching the bait advertising provisions of the FTA may find themselves fined.

Any representation in advertising that is made about availability should be truthful and not misleading. If no representation as to availability is made it will likely be considered that the goods or services should be supplied for a reasonable period of time and in reasonable quantities.

Therefore, prior to advertising, suppliers should ensure that the advertisement has a stated period of acceptance and that during such period the supplier will have reasonable quantities of the good or service available. What is reasonable will be dependent on the nature of the advertisement, the likely demand and the market in which the supplier is operating.

It is therefore important that any advertisement qualifies the availability of the offer clearly and in a way visible to the consumer. Statements such as ‘while stocks last’ may not be sufficient for example if the business never had reasonable stock available to meet the demand at that price. Any limits on an offer should be clearly stated including any expiry of the offer. These statements should be clearly visible and not “buried in the small print”.

If despite a business’s best intentions there is no stock available for an accepting customer then businesses should strongly consider whether they should have a “rain check” or backorder system. Provided the goods can be supplied within a reasonable time after acceptance this will likely act as a defence against a breach of the bait advertising provisions of the FTA.

James Stewart – Partner