Unconscionable Conduct Consumer Protection: Understanding Unfair Contract Terms

Definition of Unconscionable Conduct

Discuss About The Unconscionable Conduct Consumer Protection?

Unconscionability is a term under the contract law which defines the doctrine of contract. The unconscionability terms are always applicable extremely unjust way. Under this term of contact, both the parties are belongs to the superior bargaining power which are related to the good conscience. When the parties of the agreement not agrees with the terms of unconscionability, then the contract become unenforceable. In most of the cases, the conduct in the unconscionable contract never allowed the benefits because the consideration was always found with lack of knowledge or inadequate of the enforcement (Beh 2015). 

It determines the unconscionability when the contract was related with bargaining power, mental capacity and age. It may also include superior knowledge, lack of choice and other accounting which can be formed due to the acts of fraud and deceit. Sometimes, due to the fact of misrepresentation it may deprive someone who belongs from valuable possession. Therefore, when one party of the contract takes advantages of another due to the unconscionable approaches, then the action will be treated as the civil action of deceit criminal or fraud (Browne and Biksacky 2013).

 The person who is the perpetrator has never holds the right where he or she can get benefit according to the consideration in the contract.  It is applicable only when the terms are found enforceable in the contract.  However, in the unconscionability, the defense can be provided to the offender when it deals with the fairness of the contract.  Therefore, the court must look for the facts where the contract becomes unconscionable due to the presence of gross inequity of bargaining power (Beh 2015). In such consequences, the contract will become unreasonable favorable towards the stronger party according to the claim of unconscionable contract. 

When the contract was formed, the unconscionable contract must be included the bargaining power, age, and mental capacity of the parties. The misrepresentation of facts must be established while the identification of such contract.  However, in this contract, the terms are cannot be changed after the formation. While the judgment, the jury members never participate in the process. The judge will provide the judgment and also identify the remedies according to the flexibility of the contract (Browne and Biksacky 2013). 

The Commercial Bank of Australia Ltd vs. Amadio is one of the famous cases of Australia, where the unconscionability has been introduced for the first time. In this case, an Old Italian couple’s son has guaranteed his parents’ for mortgage their property. When their son has failed in the business, the Commercial bank has claimed the property in exchange of the loan. However, the court has found in this case the contract was unconscionable. The bank manager had the knowledge about the Amadios that they are old and not have knowledge about English language.  The bank also found to act fraud with them that there is no limit of liability as per the terms of guarantee. The court has been stated that the bank manager has knowledge about disabilities of the parties and formed the contract of mortgage. There are lack of advanced age, lack of fluency, lack of business acumen and the financial condition of the builder’s son.

Key Terms in Unconscionable Conduct

The facts of the unequal bargaining are mostly established in the unconscionable contract when the unreasonable facts are performed by one party to another party. In such fact, one party always aware about the concept that other party has lack of knowledge to understand the consequences of the terms of the contract. 

In the case of Suisse Atlantique Société d’ Armement Maritime SA v NV Rotterdamsche Kolen Centrale, the court has been introduced the fact of Doctrine of Inequality of Bargaining Power.  The case has been described the concept of bargaining power which mainly occurs when the party look through the agreement where he might understand some facts and some of the facts they missed.  The freedom of contract defined the term of bargaining. Inequality of bargaining is another term where one party will bargain in the agreement for better alternative opportunities (Browne and Biksacky 2013). In this process, the parties who are using the alternative opportunities will have more power and other party will use the power as well at the formation of the contract.  While in this contract, the bargaining power is unequal to the idea of Inequality of bargain power. In this bargaining power, the justification of the implication of power is one of the important parts which form the contract directly through law or non-enforcement of a contract by the courts.

Schroeder Music Publishing Co Ltd v Macaulay is another case of unconscionable contract` in this case one of the music companies has comes under a contractual term which is related with the restraints of trade in a standard form of contract with a young songwriter. In related with this case, the court has been stated that the contract was made freely by the parties as per the equal terms or moulded under the pressure of negotiation. However, no evidence has been found where the contract was fitted with such description. Negotiation is the process where the bargaining process can be use according to the terms of the contract. The unequal bargain helps to demonstrate the unconscionability in the contract which are mostly relayed with the transactions of debts in the bank guarantees (Hedlund 2016).

It is necessary to describe the facts of the contractual terms. If it has been found that the contract was formed by one party and it will unenforceable against the person. However, it is only applicable when the party is minor or the person with mental difficulties. It is used for preventing to take advantages by the aggrieved party from the innocent party due to the lack of ability.

Relevant Case Laws

In the unonscionable contract, it has identified the terms where it defies the unfairness of the agreement. When the unfairness of the contract has been applied in the unequal bargaining power from side by side, it is necessary to understand the facts of the management. It also directly effects on the unfair terms which failed to represent the unequal bargaining power between the parties. However, it has been found that the contract has become unconscionable, the parties can avoid the contract and rework on the issues. In the unconscionable contract, it is necessary to establish the terms of illegal or frauds. The damages may not be awarded in the in such contracts for not able to establishment of the contract.

In the Inequality of bargaining power, most of the case, the banks are identified as aggrieved party who get involved with such bargaining power. After the formation of the contract, the agreement was given pre-drafted by one of the strongest parties who will accept the terms. Another party will accept the terms without the opportunities or time which was changed by their own choice. In the bargaining position, one party will always accept the mentioned terms which are found useful them. In most of the cases, it will become useful for the parties who tried to execute or set the limits of the liabilities without taking care of the interest of the other side. Here, the weaker party is suffered the most at the negotiation terms (Hedlund 2016). However, banks are the found the strongest parties in the Inequality of the bargaining power. At the time of taking any property for mortgage process, the parties are provided with their exclude or limit his liabilities for not caring the interest of the other side of the interest. Now the other party when takes the advantages of the mortgage or lease property, the bank provides with loans and the authority of the banks keeps the knowledge about the parties who are entering into the contract.

In the use of Standard condition and terms, it helps to established the facts where the consumers enter into the contract. Most of the business people entered into such contracts which consisted with the basis of one person’s standard form of agreement or based on a standard form of document. In the process of the contractual terms, it includes the order form, price list or catalogue, confirmation of the order, put forward by one party and incorporated by reference the standard terms and conditions of the trade associations.

Unconscionability in Financial Sector

While in the bargain power of the contract mostly presents in between two parties, the legislatures and court both have evolved in the certain rules for the protection of interest of the weaker party. However, in the absence of the specific legislation, it is the duty of the court to interfere with standard form of contracts which unequal used to provide the evidence of unequal bargaining power. The courts are found to provide reliefs in those cases where the weaker party has faced with the burdened with unfair, unjust, unconscionable, unconstitutional and oppressive obligations under a standard form of contract. It is not recognized as a form of procedural unconscionability but the most of the common forms found unconscionability employed by the courts.  Court sometimes tried to identify bargaining power which is based on the evidence where the buyer is a small company or individual and seller is a large company. It can become the result of a specific monopoly.

Under a contract, parties can protect them by own against enforcement of an unconscionable provision in a contract. However, it never works in; obtain damages which are subjected to the unconscionable contracts. According to the terms of the contract, the parties cannot seek advantages or resolution in relation with a unconscionable contract. Therefore, the doctrine of such contract allowed the court for deny the enforceability of the contract to develop on the terms of a contract for alleviate the unconscionable portions. Therefore, the doctrine of the contract helps the parties to form the contract fairly and freely.  The opposite party in the unconscionable contract always suggests finding the contract with the term with unfair where court can change or modify the overall appropriate by courts, rework and reformation on the single terms of contract is the least disruptive method of correction (Hedlund 2016).

The Financial and Consumer Rights Council (FCRC) is one of the professional associations in Victoria which works as financial counselor. It helps to provide enough support and other assistances with different agencies which assist the vulnerable Victorians experiencing financial difficulty. This organization is mainly works with the government, utilities, debt collection, banking jobs and other ways to develop the approaches of the financial difficulties for the vulnerable consumers.  In most of the cases, the unfair terms always form it out and confirm that consumers who are in relation with the unfair practices have rights to enter in to the contract as per the protection by the Australian Consumer Law. The FCRC make it confirm about the benefits where it may banned from being included in the contract (Hedlund 2016).

The Financial and Consumer Rights Council (FCRC) has been heighted on the different segments which are all related with the consumer protection along with the practices related to the financial concealing. They help the parties or the plaintiffs who want to start a legal proceedings against the another party or the defendants. In other way, the group also provides the information and knowledge to the consumers against those unfair contracts, which can be introduced by the parties without the use of the equal bargain (Beh 2015).

In most of the cases, according to circumstances of the low-income earners, it has transferred into a hardship where the options may not able to confirm the results towards the detriment of both parties according to the dispute which are remaining unsettled. Therefore, the business law of Australia has different grounds where courts can relate to unconscionable conduct of dominant and weaker parties. it also protects the consumer rights against the seller of such productions. The advocacy process also define those several groups which are related the security of the rights of weaker party against the strong party.

Reference

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