Small business education program

Relevant factors

The ACL lists a number of factors for a court to consider when assessing whether conduct is unconscionable. They include:

  • the relative bargaining strength of the parties
  • whether the weaker party could understand the documentation used
  • the use of undue influence, pressure or unfair tactics by the stronger party
  • whether any conditions were imposed on the weaker party that weren't necessary to protect the stronger party's legitimate interests
  • the willingness of the stronger party to negotiate
  • the extent to which the parties acted in good faith.

This is not an exhaustive list, and courts may also consider any other factor they think relevant.

Case studies:

  1. Business-to-business: A landlord wanted unreasonable rent for the renewal of a shop lease (which it represented as below market value) and required a very short timeframe for its tenants to respond to the proposed rental offer. The landlord's conduct involved small business owners who had little or no ability to speak or read English and the landlord was aware of this. The landlord also failed to comply on an ongoing basis with Victorian retail leasing legislation and threatened to evict or send letters of demand to certain tenants. The landlord's conduct was unconscionable. (ACCC v Dukemaster Pty Ltd)
     
  2. Business-to-consumer: Craftmatic was found to have used misleading and unfair sales tactics to sell beds to elderly people during home presentations. Craftmatic's sales and promotional methods were designed, scripted and conducted to unduly influence potential consumers, and to create and take advantage of an unequal bargaining position and, as a result, its conduct was unconscionable. (ACCC v Craftmatic Pty Ltd)

For more information, visit Unconscionable conduct.