Consumer law: What is unconscionable conduct?

by The FindLaw Team

If you’re a regular viewer of nightly current affairs programs, you’d be hard pressed not to find an episode in which a supplier has ripped off a member of the public during a transaction by behaving unconscionably. Although,  It makes for compelling television, the unfortunate reality is that  unconscionable conduct by suppliers can happen, and Australian consumers are afforded protection from a person who has acted unconscionably via s 21 of the Australian Consumer Law (ACL). The unconscionable conduct provisions in the ACL, specifically prohibits anyone who is in trade or commerce, to behave unconscionably in the connection with the supply, or possible supply of goods or services.

Who is a consumer?

Although you and I may believe that a consumer falls under the umbrella of anyone who makes a purchase, this is not the case, and the ACL does have specific definitional requirements, of who is to be considered as a consumer. Under s 3 of the ACL, a consumer is a person who has acquired goods or services, if, and only, if:

• the amount payable for the goods or service did not exceed $40,000
• if the goods or service purchased is greater than the prescribed amount under the section, then the goods or services are of the kind which is ordinarily acquired for personal, domestic or household use or consumption
• the goods are a vehicle or trailer which is principally used in the transport of goods on public roads.

In contrast, a person is deemed, not to be a consumer:

• if they acquire, or hold themselves out as acquiring goods for the purposes of re-supply
• using the goods up or transferring them in trade or commerce: in the course of a process of production or manufacturing; or in the course of repairing or treating other goods or fixtures on land.

What does the ACL consider as unconscionable conduct by a supplier?

Although the core of what is deemed to be unconscionable conduct is not defined in s 21(1) – besides prohibiting the behaviour. The definition of unconscionable conduct, is generally seen to have a broader interpretation than the former Trade Practices Act, in what may constitute unconscionable conduct by a supplier. Furthermore, the courts are still able to consider the relevant matters in determining whether a supplier has contravened subsection 21(2) of the ACL, by having a regard to:

• the relative strength in the bargaining position of the supplier and the consumer
• whether due to the conduct engaged by the supplier, the consumer was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier
• whether the consumer had an understanding of the relevant documents, which relate to the supply, or possible supply of a good or service
• whether there was any undue influence, or pressure exerted towards a consumer by the supplier, or a party connected with the supplier, relating to the supply, or possible supply of the good or service
• the amount and circumstance in which the consumer could have acquired an identical, or equivalent good or service other than from the supplier.

What are the available remedies for a consumer who has been subjected to unconscionable conduct from a supplier?

The enforcement powers and remedies that may also be applied to a supplier who is found to be in contravention of the unconscionable conduct provisions are:

• undertakings
• substantiation notices
• public warning notices
• infringement notices
• injunctions
• damages
• compensatory orders
• orders for non-party consumers
• non-punitive orders
• adverse publicity orders
• orders disqualifying a person from the management of corporations
• orders for the preservation of property.

If a supplier is found to be in contravention of s 21, then the supplier may be liable to pay a civil pecuniary penalty of up to $1.1 million for a body corporate, or $220,000 for other persons. It is however important to be aware, that a supplier who is found in contravention of the unconscionable conduct provisions, will not face criminal liabilities. 

If you are experiencing an issue with a supplier relating to a consumer transaction, please talk to a lawyer who will be able to assist you with your matter.



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