Australian Consumer Law for Trade Practices Act- myassignmenthelp

Question: Discuss about theAustralian Consumer Law for Trade Practices Act. Answer: The provisions related with unconscionable conduct can be found in sections 20-22 of the Australian Consumer Law (ACL). The provisions of section are equivalent to section 51AA,Trade Practices Act and appeared to have limited utility. In this regard, particularly for the small businesses, more relevance can be given to sections 21 and 22 of the ACL. According to section 21, it has been mentioned that in context of trade or commerce, a person should not supplied goods or services and become involved in conduct that can be described as unconscionable under the circumstances. In this regard, a non-exhaustive list is present in section 22 regarding the factors that can be referred by the court while deciding if a particular conduct can be described as unconscionable or not.[1] In this regard, in the discussion related with unconscionable conduct, regions of section 21(4) are also relevant. There were a number of uncertainties present in section 51AC, Trade Practices Act and the question was generally asked if the provision was limited to equitable doctrine or if it was a concept having wider application. Similarly this section was applicable only in case of substantive action of a contract or if it applied only and procedural phase of contract.[2] In order to deal with these issues, an expert panel was formed by the Commonwealth Government so that the scope of unconscionable conduct provisions that were present in the TPA would be clarified. A set of interpretive principles were suggested by the expert panel with a view to give general guidance. These interpretive principles have been mentioned in section 21(4) of the ACL. It was noted by the expert panel that the purpose behind these interpretive principles is to recognize that section 21, ACL (former section 51AC) had the intention of going beyond the scope of equitable doctrine of unconscionability. Similarly, there were certain principles that can be used from the case law. In this regard, the parliament had the intention that the court may look at the terms and progress of a contract. The provisions can be applied to the patterns of behavior or the systems of conduct, and it is not necessary that a special disadvantage should be identified in order to attract the application of these provisions.[3] Section 21(4)(c) is particularly relevant for the present research. It has been mentioned in these provisions that the Parliament had the intention:- (c) That while dealing with the issue, whether conduct related with the contract can be described as unconscionable, the consideration of the contract by the court includes the:- (i) Terms of the contract; and (ii) The manner and the extent of carrying out the contract. It is not limited to the consideration, by the court, of the circumstances dealing with the formation of the contract. It has been clearly mentioned by section 21(4) that this section deals with procedural as well as substantive unconscionability. This position assumes significance due to the reason that along with considering the conduct of the supplier or the acquirer regarding the manner and the extent of carrying out the contract, emphasis has also been placed on the consideration of the terms of contract.[4] There are several factors mentioned in section 22 that are relevant for evaluating the terms of a contract. In this regard, particular interest is done by section 22(1)(j) and (k). It has been mentioned that:- (j) In case of a contract that exists between supplier and customer regarding the supply of goods:- (i) The level to which the supplier wanted to negotiate the contractual terms with the customer; and (ii) the contractual terms and conditions; and (iii) the conduct of supplier and customer, concerning the compliance of terms and conditions of the contract; and (iv) The conduct of supplier or customer regarding their commercial relationship, after the formation of the contract: and (k) Without restraining the above paragraph (j), if a contractual right is available to the supplier to unilaterally differ the contractual terms related with the supply of goods or services. In this regard, there are certain other factors mentioned in section 22 that I also relevant. In case of this is to business contracts. Some examples in this regard can be given of sections 22(e), (f), (g), and (h). However, an important question that arises in this regard is if in the absence of unfair contractual term provisions applicable in case of small business transactions, can these small businesses use the provisions of section 21 for the purpose of challenging an unfair term of the contract. In other words, it can be asked, what are the circumstances where the inclusion of an unfair term in the contract can be described as unconscionable conduct as mentioned in section 21 of the ACL. Scope of unfair contract term provisions and unconscionability mentioned in section 21: The scope of unfair contract term provisions is relatively narrow as compared to the broader assessment of conduct that is available under section 21 of the ACL. The scope of section 21 is wide enough to extend to the deliberation of contractual terms and also the way of carrying out the contract. At the same time, it can also be stated that the courts are allowed to consider the procedural as well as the substantive stages of contract when they are dealing with the question if the conduct of a particular party can be described as unconscionable.[5] As is the case with consumer contracts, there are certain business to business contracts, where the terms of the contract can be described as objectionable on the face of the contract and if the unfair contract term provisions are extended to such contracts, there would be applicable. And example in this regard can be given of a rather extreme clause that allows the supplier to terminate the contract without giving any notice. It may appear that such a term violates the provisions of section 23, as it results in a major imbalance between the position of the parties, it would appear to be unreasonable in terms of validity beginnings of the business and almost invariably, such term will result in a detriment. It would appear that the term fits within the factors mentioned in section 25(1) (a) and (b). Therefore in such a case the UCT provisions will be helpful for the business person.[6] But in this regard, there is no reason do to make it can be stated that the reliance on such term c annot be described as unconscionable also. Although in the earlier decisions, the courts have expressed doubt that only by exercising the terms of the contract that have been agreed between the parties, can be treated as unconscionable, in the more recent cases, it has been recognized that under the right circumstances, enforcing strict contractual rights by one party can be considered as unconscionable conduct. The provisions of section 21 cover the contractual terms and also the method of carrying out contractual terms. Unconscionable conduct: at this point it needs to be mentioned that various sort of unconscionable conduct our present under ACL. The two major kinds of conduct are (i) unconscionable conduct falling under the unwritten law (section 20) and (ii) statutory unconscionability (s 21). It is significant to mention that section 20, ACL is not applicable in the cases where the conduct has been remedied by the provision of section 21. Unconscionability under unwritten law: it has been mentioned in section 20 that a person should not be involved in unconscionable conduct in trade or commerce, falling under unwritten law. It emerges that it refers to the doctrine of unconscionable dealings as described in the case law. However still the courts have not settled the issue of what amounts to unconscionable conduct, particularly under the unwritten law as mentioned in section 20, ACL.[7] Therefore we may surpass unconscionability for the purpose of including other equitable doctrines, for instance, equitable estoppel, where the court is not ready to grant relief to the party that has himself not acted fairly. As interpreted by the case law, unconscionable dealings take place than the following two requirements are satisfied:- (i) One party to the contract should be under a special disability; and (ii) An unfair advantage should have been taken of such disability by the other party, either having the knowledge of such disability or where the other party closes its eyes to such disability. However, even if it is not an explicit prerequisite, but the courts are more likely to conclude that an unconscionable advantage has been taken by the other party increases where the transaction is very disadvantageous for the party suffering from disability. Types of special disability: the codes have arrived at the conclusion that the party suffers from a special disability and such party was used by the other to the contract in a number of situation. For instance, in Blomley v Ryan[8], Fullgar J had stated the wide range of conditions which include poverty or need of any kind, infirmity of mind or body, old age, sickness, drunkenness, lack of education or the lack of assistance or explanation, where such assistance or explanation should have been provided. In this case, the court had rescinded a contract related with the sale of a farm at a value much less than its real value because the decision was that the purchaser had taken advantage of the drunkenness of the farmer when he had signed the contract. In this case, Blomley had entered into a contract for purchasing a form from Ryan. At that time, Ryan was 70 years of age. He was also suffering from the effects of excessive and prolonged use of alcohol. When Ryan tried to resile from the sale in accordance with the contract, Blomley sought specific performance of the contract. In this case, one issue was if Ryan had the necessary capacity to enter into the agreement. The leading case in this regard is that of Commercial Bank of Australia v Amadio.[9] In this case, the Amadio's were in elderly couple who had migrated from Italy. They signed a bank guarantee on behalf of their son. At that time, they were under the impression that the business of their son was very prosperous. However the reality was that the business was facing financial problems. The bank had enhanced the appearance of solvency of the business by selectively honoring cheques that overdrew his account. When the business failed, the bank tried to enforce the guarantee against the elderly couple. However, the court set aside the guarantee by terming it as unconscionable. The court stated that in this case, the guarantee can be described as manifestly disadvantageous for the Amadios. The bank should have known this fact but it failed to take any steps to make sure that the elderly couple received properly advice regarding the transaction. Apart from the case mentioned above, it has also been mentioned by section 21 that a person should not be involved in unconscionable conduct in trade/commerce. It needs to be mentioned that the statutory unconscionable provisions were altered in 2011. The goal was to make them clearer and easier to understand for consumers, businesses, courts and enforcement agencies.[10] It has also been clarified by the law that the provisions of section 21 are not planned to be confined to equitable or common law canon of unconscionable conduct.[11] The meaning of this provision is that as against unconscionable conduct mentioned in the unwritten law the claimants are not under an obligation to establish that they were suffering from a special disadvantage on account of factors like old age, infirmity or language problems before it can be recognized by the court that unconscionable conduct occured. Secondly, a new interpretive principle has been added in order to clarify that the courts have the p ower to evaluative the terms of the contract and also the manner and extent to which the contract has been performed. As a result of this principle, it becomes clear that unconscionable conduct is not restricted to the bargaining practices, resulting in the creation of the contract. The unconscionable conduct can also be found from the way in which the rights have been a size by a party to the contract or through the way a party behaves after the formation of the contract. According to the final interpretive provision, the prohibition imposed on unconscionable conduct is applicable to systemic conduct or the behavior pattern. Therefore, there is no need to conclude that the person was at a disadvantage so as to apply the prohibition.[12] Is any protection purchased by section 21 of the Australian Consumer Law at too high a price?: As mentioned above, depending on the way, the cases of alleged unconscionable conduct related with the terms of the contract are considered by the courts, some believe may be provided by section 21 from the existence and effect of unfair contract terms, although the unfair contract term provisions may not be available. It is worth mentioning that the remedies that have been provided by section 21 can be of some use to small businesses as compared to the remedies provided by unfair contract term provisions. In case the terms of the contract are held to be unfair, the contract will be void. On the other hand, if the contract is capable of continuing without such term, it will do so. On the other hand, if the contract is not capable of continuing without such term, the contract needs to be set aside. Compensation can be provided to the party for any loss that may have taken place as the operat ion of the term. As compared to this position, any breach of unconscionability provisions may result in civil pecuniary penalty apart from a wide range of enforcement powers and remedies which include compensatory orders under section 237 of the ACL. In the end, it can be stated that some assistance may be provided by section 21, ACL to small businesses under certain circumstances. The scope of statutory unconscionability provisions has been clarified by section 21(4), ACL. Hence it can be stated that these provisions are applicable to the terms of a contract and also to the substantial performance of the contract. Although this is a promising development, but the lofty standard that is necessary for establishing unconscionable conduct may work against the success of small businesses, except in view of the operation of the most arduous term.[13] However, the factors mentioned in section 22 give a license for adopting a wider, contextual view of the terms of the contract. While the unfair contract provisions appear to be focused on 'discrete' instead of relational transactions, the factors mentioned in section 20 to allow the consideration of a wider relationship between the parties and the circumstances related with the operation of particular term. It can also be stated in the end that the protections that are available to consumers by entering into contracts with commercial entities reveal the lack of protection that is available to small businesses in case of entering into business-to-business contracts with large players. The diverse the of composition, size and the experience of small businesses and in several cases the vulnerabilities that the small businesses share with the consumers makes it an equitable that only some members of what can be described as the class of 'consumers' are receiving statutory protection. However, when the statutory provisions and common operations that are available to small businesses are evaluated, this perceived lack of legal protection for small businesses appears to be more apparent than real. It is true that under the common law, clearly there is a scope for established doctrines to be used for providing some protection to small businesses when they enter into contracts with their larger counterparts. Bibliography Brown, Deborah. "Unconscionability In Common Law, Equity and Statute." (2014) Carrington Rand Journal of Social Sciences 021 Horrigan, Bryan "Unconscionability Breaks New Ground -- Avoiding and Litigating Unfair Client Conduct After the ACCC Test Cases and Financial Services Reforms" [2002] DeakinLawRw 4; (2002) 7(1) Deakin Law Review 73 Knoll, David D. "Protection against unconscionable business conductsome possible applications for s 51AC of the Trade Practices Act 1974"(1999) 7 Competition Consumer Law Journal54 Martin, John (2001) Commercial Unconscionability The Trade Practices Act, presentation at the Australian Equipment Lessors Association Leasing Technical Conference, Sydney, 15th November, 2001 Mason, Sir Anthony, 'Changing the law in a changing society' (1993) Australian Law Journal 568 Russell Miller, Australian Competition and Consumer Law Annotated (Thomson Reuters, 35th ed, 2013) 1557 Australian Competition and Consumer Commission v Excite Mobile [2013] FCA 350 Australian Competition and Consumer Commission v Lux Pty Ltd [2004] FCA 926 Australian Competition and Consumer Commission v Telstra Corporation Limited [2007] FCA 1904 Blomley v Ryan [1956] HCA 81 Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60 Collection House Limited v Taylor [2004] VSC 49 Commercial Bank of Australia v Amadio [1983] HCA 14 Director of Consumer Affairs Victoria v AAPT Ltd [2006] VCAT 1493