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).

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 Competition and Consumer Act 2010 (Cth) (and, to a more limited extent, some sector-specific state and territory legislation (esp in relation to retail tenancy)) also prohibits unconscionable conduct. It prohibits such conduct in the same circumstances as equity and also more specifically in relation to consumer and certain business transactions.

Note: the Competition and Consumer Legislation Amendment Bill 2011 proposes to remove the distinction between consumer and business unconscionable conduct which currently exists in sections 21 and 22. If passed (which is likely - the bill was previously introduced as the Competition and Consumer Legislation Amendment Bill 2010 and passed through the House of Representatives - it lapsed at the end of Parliament on 29 September 2010 before it passed through the Senate, but prior to then a Senate Inquiry into Competition and Consumer Legislation Amendment Bill 2010 had recommended its passage) the prohibition - accessible to everyone other than a listed public company - will be contained in section 21 and the list of factors relevant to determining whether conduct should be classified as 'unconscionable' will be contained in section 22.

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 (then) TPA.

Detailed discussion forthcoming