Unconscionable conduct is unfair or unreasonable conduct in business transactions that goes against good conscience. This can occur in transactions between businesses or in transactions between businesses and consumers.
The exact meaning of ‘unconscionable conduct’ is not defined in the Trade Practices Act. The Act lists several factors that the court considers when deciding if a party has acted unconscionably. However, the court is able to consider any other matters it believes are relevant.
How can I avoid acting unconscionably towards my consumers?
The most effective way to avoid behaving unconscionably is to treat all consumers fairly. Avoiding harsh or oppressive conduct not only benefits your reputation among consumers, but it also greatly reduces the risk of treating any consumer unconscionably.
Outlined below are some steps you can take in each stage of your relationships with consumers to avoid behaving unconscionably. You should also ensure that your staff are aware of their obligations under the Act, and that they ‘follow the rules’ when dealing with consumers.
When advertising your goods and services:
Consider your audience: who are you trying to reach? How will your message affect recipients, particularly people with limited English language skills, education or commercial experience?
Use plain, uncomplicated language when advertising to a wide range of consumers.
Do not use harsh or oppressive terms in agreements or contracts—particularly terms that are not necessary to protect the interests of your business, or attempt to limit the rights of the consumer.
If a dispute arises, you may not be able to rely on these kinds of terms, and any attempt to enforce them may be considered unconscionable.
Clearly set out all key terms of the agreement—ensuring that consumers are made aware of key terms and conditions. If a key term is buried at the back of a long contract or hidden in fine print, it may not be enforceable.
When negotiating with customers:
Make full and frank disclosure—this means ensuring your customer is aware of and understands the key terms of the agreement. If there are any unusual or important terms, you should ensure that the customer understands them and any possible consequences they may have.
Avoid high pressure sales tactics—there are limits on how far you can go to make a sale. You may be dealing with many sections of the public, and conduct that is appropriate for some consumers may threaten or intimidate others.
After-sales service:
Have an effective complaint handling system—ensure that your business has a system that allows customers to easily raise disputes and have them resolved.
Be prepared to negotiate and set aside the contract if required—if it appears that you or one of your employees may have engaged in any form of unconscionable conduct, be prepared to release the consumer from the agreement. It is likely to be less expensive for you to set aside the agreement—and the goodwill generated will benefit your business. This is especially important if key terms of the agreement (such as price) have changed, and the consumer no longer wishes to be part of the agreement.
This section applies to transactions between businesses and consumers, for goods bought for household use. It outlines a list of matters that the courts may consider when determining whether unconscionable conduct has occurred—although the court is free to include any factors it thinks are relevant. These include:
the relative bargaining strengths of the business and the consumer
whether the business required the consumer to comply with conditions that were not reasonably necessary to protect the legitimate interests of the business
whether the consumer understood any documentation that may have been used
whether the business used undue influence, pressure, or unfair tactics
the price and terms on which the consumer could have acquired the same or equivalent goods elsewhere.
It is important to remember that this list is not exhaustive; the court may take into account any matters which it believes are relevant to the specific situation in each case.
