Unconscionable Conduct

Note: on 1 January 2011 the Trade Practices Act was renamed the 'Competition and Consumer Act 2011' and the full Australian Consumer Law took effect. This included the repeal of Part IVA of the TPA dealing with statutory unconscionable conduct. , including s 52 dealing with misleading and deceptive conduct. Equivalent provisions are now contained in ss 20-22 of the Australian Consumer Law (contained in Schedule 2 of the Competition and Consumer Act 2011). The discussion below dealing with statutory unconscionable conduct has not yet been updated to reflect this change and should be treated with care.

Unconscionable conduct also deals with transactions between dominant and weaker parties; it therefore overlaps with duress and undue influence. Unconscionable conduct is prohibited both in equity and, more recently, by statute.

Equity intervenes where one party has taken advantage of a 'special disability' (most commonly age, illiteracy, lack of education or a combination of factors) held by the other. The resulting transaction must normally also be harsh and oppressive to the weaker party. Where established the weaker party may choose to avoid the transaction.

The Trade Practices Act 1974 (Cth) (and, to a more limited extent, state and federal fair trading legislation) also prohibits unconscionable conduct. It prohibits such conduct in the same circumstances as equity and also more specifically in relation to consumer and small business transactions.

There is no statutory definition of 'unconscionable conduct' and a 2008 report recommended against incorporating such a definition in the Trade Practices Act: see my blog entry discussing this.

The ACCC has recently released a video providing an overview of the unconscionable conduct provisions in the TPA.

Detailed discussion forthcoming