32. What is unconscionable conduct?

Unconscionable conduct is difficult to describe or define as it varies on a case-by-case basis. As a general rule it is conduct that is so harsh that it goes against good conscience.

Section 21 of the Australian Consumer Law prohibits unconscionable conduct between businesses and businesses and consumers. Section 21 also sets out principles to assist businesses and consumers in understanding what unconscionable conduct is:

  • section 21 is not constrained by judge-made law, i.e. it is not necessary to show that a party suffered from a special disadvantage or disability
  • a system of conduct or pattern of behaviour may be unconscionable regardless of whether any particular consumer or business has been disadvantaged by the conduct or behaviour, i.e. a 'victim' does not need to be identified for conduct to be unconscionable
  • when determining whether conduct in relation to a contract is unconscionable, courts may consider the way the contract was carried out and the degree to which the contract was carried out.

Section 22 provides a list of factors that the court may consider in determining whether unconscionable conduct has occurred, including:

  • the relative strength of the bargaining positions
  • the imposition of unnecessary conditions
  • whether a party was able to understand the documents
  • whether any undue influence, pressure or unfair tactics were used
  • availability and price comparison of goods elsewhere
  • whether the conduct was consistent with other dealings
  • the requirements of an applicable industry code (i.e. the Franchising Code)
  • whether the stronger party failed to disclose any intended future conduct that might have affected the other party's interests
  • whether the stronger party was willing to negotiate
  • whether the stronger party had the power to unilaterally vary a term or a condition of a contract between the parties for the supply of goods or services
  • 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.