LAW 1503 Lecture Notes - Lecture 6: Consumer Affairs Victoria, Coles Supermarkets, Unconscionability
23 May 2018
School
Department
Course
Professor
Unconscionability
STEP ONE: Determine if in trade or commerce
• any business/ person dealing with a customer/ party external to them
o Includes dealings between businesses, but not their internal
affairs (Concrete Constructions (NSW) Pty Ltd v Nelson).
o Excludes private sales (O’Brie v Soloogov; Williams v
Pisano)
• If in TC- ss 21/20
o S 21: Supply of goods and services to CONSUMERS (but not
bank loans)
o S 20: BUSINESS dealings; BANK LOANS (mention- provision
of financial services are covered by the ASIC Act, which ACL
mirrors)
• Consider common law when facts lend to special
disadatage/ arried oas equity
• Not in TC- Common law
1. TC- Consumer transactions
Cause of action: unconscionability under ACL s 21
STEP ONE: S 21(1) a person must not, in trade or commerce, in connection
with:
a. The supply or possible supply of goods or services to a person (other
than a publicly listed company); or
b. The acquisition or possible acquisition of goods or services from a
person (other that a publicly listed company)
Engage in conduct that is in all the circumstances, unconscionable
STEP TWO: unconscionable conduct is not defined.
• serious misconduct (Hurley v McDonnalds) but not enough that
conduct is unfair or unreasonable, Paciocco v ANZ must be some
moral obloquy/lack of ethics/ deliberate wrongdoing Director of
Consumer Affairs Victoria v Scully;
o s 22 lists each of the matters to which the court may have
regard for in determining meaning the purposes of s 21 (see
below)
o Conduct must be against good conscience as assessed by
reference to the 'norms or standards or society' ACCC v Lux
Distributors
• Norms
o consumers
→ will be dealt with honestly, fairly and without
deception or unfair pressure (ACCC v Lux
Distributors)
→ no trickery, Protection of vulnerable, Good
faith and fair dealing
→ Not exercising inequality of bargaining power
in a way against good conscience
→ Will reverse enrichments unjustly received
• businesses
o No bullying or thuggish treatment of franchisees
(ACCC v Simply No-Knead) or serious, deliberate and
repeated misconduct towards suppliers (ACCC v
Coles Supermarkets)
o ACCC v Woolworths: s 21 not unconscionable
to seek financial support from invulnerable,
experienced suppliers. Dealings were normal
for the super market situation. No threats.
• Need not target particular individual- s 21 can apply to a
'system of conduct or pattern of behaviour s 24(4); ASIC v
National Exchange
STEP FOUR: Remedy under the ACL (see below)
find more resources at oneclass.com
find more resources at oneclass.com
2. TC- Business dealings; bank loans (ACL applies because it mirrors ASIC
Act)
Cause of action: unconscionability under s 20(1) ACL
STEP ONE: ACL s 20(1) a person must not, in trade or commerce, engage in
conduct that is unconscionable within the meaning of the unwritten law
from time to time
STEP TWO: Action may also be available under common law but will
consider ACL action first as it is more advantageous to plaintiff due to
the broad range of statutory remedies available (not limited to
rescission)
STEP THREE: Unwritten law is not defined
o It is clear that this refers to 'judge made law' (common law) as
distinguished from legislation, but unclear when it applies, issue
not resolved by HC in ACCC v Berbaits
o NARROW VIEW: it applied only under the doctrine of
unconscionable bargains in cases of special disability
o Ill health due to persistent intoxication (Blomley v
Ryan);
o Age and lack of English (Commercial Bank v Amadio);
and
o Emotional dependence- would do anything for
someone, talked into signing contract (Louth v
Dispose)
• Not where there is an inequality of
bargaining power, or if there is pressing need
(ACCC v Verbaits; ANZ Banking v Karam); or
when voluntarily engaging in a lawful but
inherently risky activity- gambling. (Kakavas v
Crown Melbourne)
o Married woman's equity
• Question extension to defacto/ same sex
relationships/ friends? ( see eg: Garacia v
NAB which was expanded in ANZ v Alirezai- a
case concerning dealings between close
friends
o BORAD VIEW: the provision does not specify it is limited to
cases of special disability so it could be in regards to
unconscionable conduct for any doctrine
STEP FOUR: Conduct that is unconscionable is not defined either
o Therefore, the common law must inform what unconscionable
conduct me
o Serious misconduct (Hurley v McDonnalds) but not enough that
conduct is unfair or unreasonable, Paciocco v ANZ must be
some moral obloquy/lack of ethics/ deliberate wrongdoing
Director of Consumer Affairs Victoria v Scully;
o Factors which the court may regard when determining If
behaviour was unconscionable include (s 22)
o relative bargaining strengths of parties
o whether recipient/supplier must comply with conditions
not reasonably necessary to protect other party
o whether recipient/supplier able to understand documents
o whether any use of undue influence or pressure, or unfair
tactics
o price/availability of similar goods or services
o whether recipient/supplier treated same as others
o requirements of any industry code
o any unreasonable failure to disclose intended conduct
that might affect recipient/supplier
o willingness to negotiate terms and conditions
o compliance with terms of any contract
o post-contractual conduct
o any unilateral power to vary terms
o extent to which parties acted in good faith
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Step one: determine if in trade or commerce: any business/ person dealing with a customer/ party external to them. Includes dealings between businesses, but not their internal affairs (concrete constructions (nsw) pty ltd v nelson): excludes private sales (o"brie(cid:374) v s(cid:373)olo(cid:374)ogov; williams v. Cause of action: unconscionability under acl s 21. Engage in conduct that is in all the circumstances, unconscionable. Step two: unconscionable conduct is not defined. serious misconduct (hurley v mcdonnalds) but not enough that conduct is unfair or unreasonable, paciocco v anz must be some moral obloquy/lack of ethics/ deliberate wrongdoing director of. Will be dealt with honestly, fairly and without deception or unfair pressure (accc v lux. No trickery, protection of vulnerable, good faith and fair dealing. Not exercising inequality of bargaining power in a way against good conscience. Will reverse enrichments unjustly received: businesses, no bullying or thuggish treatment of franchisees (accc v simply no-knead) or serious, deliberate and repeated misconduct towards suppliers (accc v.
