Unconscionable conduct – what is it and how to avoid it...

On 12 September the ACCC issued its Business snapshot: Unconscionable Conduct publication. The snapshot sets out the principles and factors of unconscionable conduct that may assist businesses and consumers in understanding what unconscionable conduct is. These principles may also assist the courts in deciding whether conduct was unconscionable.

The snapshot provides practical tips for businesses to minimise the risk of becoming a victim of unconscionable conduct, as well as to avoid engaging in such conduct towards other businesses or consumers.

It also explains unconscionable conduct using actual examples of cases where the ACCC has successfully prosecuted businesses for engaging in such conduct towards Indigenous consumers, elderly consumers, small businesses owners from non-English speaking backgrounds, and franchisees.

What is unconscionable conduct?

Unconscionable conduct is not a defined concept in the Competition and Consumer Act 2010 and it can be a difficult concept to understand. Certain conduct may be unconscionable if it is particularly harsh or oppressive. It may also be unconscionable where one party knowingly exploits the special disadvantage of another. It needs to be more than just hard commercial bargaining.

Factors to consider

There are a number of factors to consider when assessing whether certain conduct is unconscionable:

• 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 price, or other circumstances, under which the weaker party would be able to buy or sell equivalent goods or services.
• The requirements of applicable industry codes.
• The willingness of the stronger party to negotiate.
• Whether the stronger party has the right to unilaterally change contract terms.
• The extent to which the parties acted in good faith toward each other.
• Any other factor indicating that the stronger party acted with little or no regard to conscience.

The Business Snapshot: Unconscionable Conduct publication is available electronically at www.accc.gov.au.