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Defined Terms and Documents
Unconscionable Conduct means
(as
defined by the ACCC) conduct which is so harsh that it goes
against good conscience.
Under the Australian Consumer Law,
businesses must not engage in unconscionable
conduct, when dealing with other
businesses or
their customers.
Unconscionable Conduct affecting consumers is covered under section
21 of the Competition and Consumer Act 2010.
Read Nine Examples
of
Unconscionable Conduct in
Labyrinth of
‘Concealed Spiders’.
Unconscionable conduct does not have a
precise legal definition as it is a concept
that has been developed on a case-by-case
basis by courts over time. Nevertheless,
unconscionable conduct is generally accepted
to mean conduct which should not be done in
good conscience. Unconscionable conduct is
more than simply unfair or harsh –
it
must have an element of bad conscience.
Business behaviour may be deemed
unconscionable
if it is particularly harsh
or oppressive, and is beyond hard commercial
bargaining.
For example, Australian courts have found
transactions or dealings to be
'unconscionable'
when they are deliberate,
involve serious misconduct or involve
conduct which is clearly unfair and
unreasonable.
A court will
consider a number of factors when assessing whether conduct in
relation to the selling or supplying of
goods and
services to a customer, or to the
supplying
or
acquiring of
goods or
services to or from a business, is
unconscionable.
These include:
-
the relative bargaining strength of the
parties
-
whether any conditions were imposed on
the weaker party that were not
reasonably necessary to protect the
legitimate interests of the stronger
party
-
whether the weaker party could
understand the documentation used
-
the use of undue influence, pressure or
unfair tactics by the stronger party
-
the requirements of applicable industry
codes
-
the willingness of the stronger party to
negotiate
-
the extent to which the parties acted in
good faith.
This is not an exhaustive list and it should
be noted that the court may also consider
any other factor it thinks relevant.
The following practical tips may assist
businesses to avoid becoming a victim of
unconscionable conduct:
-
ensure all commercial agreements are in
writing
-
make sure you fully understand all the
terms of the transaction
-
do not sign any agreements without
reading them carefully
-
ask for plain language explanations and
obtain independent professional legal or
financial advice if unsure
-
if you think you are being treated
differently, ask why
-
do not allow yourself to be talked into
a deal that is wrong for you by high
pressure sales tactics. Be wary of tight
decision deadlines
-
look for the best deal and try to
negotiate the outcome you want
-
be prepared to walk away from a deal
that does not ‘feel’ right. It could be
an unreasonable or oppressive deal.
The following practical tips may assist
businesses to avoid engaging in
unconscionable conduct:
-
do not exploit the other party when
negotiating the terms of an agreement or
contract
-
take care to be reasonable when
exercising your rights under a contract
-
consider the characteristics and
vulnerabilities of your customers. For
example, use plain English when dealing
with customers from a non-English
speaking background
-
make sure your contracts are thorough,
easy to understand, not too lengthy and
do not include harsh, unfair or
oppressive terms
-
ensure you have clearly disclosed
important or
unusual terms or conditions
of an agreement
-
ensure customers understand the terms of
any agreement associated with the
transaction and give them the
opportunity to consider the offer
properly. If the contract is long, you
may decide to provide a summary of the
key terms
-
observe any cooling-off periods that may
apply or consider offering a cooling-off
period
-
give customers the opportunity to seek
advice about the contract before they
sign it
-
if things go wrong, be open to resolving
complaints
-
do not reward your staff for unfair,
pressure-based selling.
If the court determines that unconscionable
conduct has occurred, a variety of remedies
may be ordered including:
-
compensation for loss or damage
-
financial penalties
-
having the contract declared void in
whole or in part
-
having the contract or arrangement
varied
a refund or performance of specified
services.
"The Australian Securities and Investments Commissions Act 2001 (Cth) regulates
consumer protection in relation to financial services,
and covers
unconscionable
conduct,
misleading and deceptive conduct and false or misleading representations."
Australian consumer law – unfair contract terms
(new provisions since 1 July 2010)
"The unfair contract term provisions apply to
'standard form consumer contracts'. Standard form contracts are commonly
used across a range of industries including telecommunications,
utilities, domestic building and finance.
Consumers and investors enter into standard
form contracts for financial products and financial services every day.
Contracts for home loans, credit cards and client or broker agreements
for example, are almost certainly standard form contracts."
"In determining whether a
term of a consumer
contract is unfair a court must take into account the extent to which
the term is transparent (that is, expressed in reasonably plain
language, legible, presented clearly and readily available to all
parties), and the contract as a whole.
If a court finds that a term in a standard
form consumer contract is unfair, the term is void.
This means that the
term is treated as if it never existed. However, the contract will
continue to bind parties if it is capable of operating without the
unfair term."
The
COMPETITION AND CONSUMER ACT 2010 - SCHEDULE
2 includes:
18 Misleading or deceptive conduct
19 Application of this Part to information
providers
20 Unconscionable conduct within the
meaning of the unwritten law
21 Unconscionable conduct in connection
with
goods or
services
22 Matters the court may have regard to
for the purposes of section 21
22A
Presumptions relating to whether
representations are misleading
Below is an extract from page 7
of "Essential
Banking Law and Practice"
"Consumer protection in financial services:
ASIC’s role
The role, powers and responsibilities of ASIC
are set out in the Australian Securities and Investments Commission Act 2001
(Cth) (ASIC Act). They include the
power to regulate unconscionable conduct and consumer protection in the
financial services industry, contained in Part 2 Division 2. It is important
to be aware that the consumer protection provisions contained in Part IVA
and Part V of the Trade Practices Act 1974 (Cth) (Trade Practices Act) no
longer apply to financial services.22 This means that when considering
bringing claims for misleading or deceptive conduct or unconscionable
conduct, you will need to refer to and plead the relevant provisions in the
ASIC Act. For example, the prohibition against misleading or deceptive
conduct by a financial services provider is s12DA of the ASIC Act, not s52
of the Trade Practices Act."
St. George and Westpac test Credit Cardholders, even
those possessing Level 5
Numeracy and Literacy Skills,
by expecting all their Credit Cardholders to read/comprehend voluminous
Conditions of Use
printed in a tiny font.
The St George Bank
Conditions of Use
is 62 pages written in tiny Arial 10 font or smaller "We
strongly recommend that you read this booklet carefully and retain it for
your future reference."
See:
Unfair Contract Terms - A DISCUSSION PAPER
- Standing Committee of Officials of Consumer Affairs Unfair Contract Terms
Working Party - January 2004
Discussion
Paper: Unfair trading and Australia's consumer protection laws - July 2015
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