Alternative Law Journal

Reform of the prohibition  on unconscionable conduct

Jeannie Paterson

Federal

Consumer protection legislation in Australia has, until recently, included different types of protection from ‘unconscionable conduct’ for consumers and for small businesses. From 1 January 2012, the Competition and Consumer Legislation Amendment Act 2011 amends sections 21 and 22 of the Australian Consumer Law (‘ACL’) and sections 12CB and 12CC of the Australian Securities and Investments Commission Act 2001 (‘ASIC Act’) by replacing these different provisions with a unified prohibition on persons engaging in unconscionable conduct in trade and commerce.

The evident intention behind these principles is to broaden the scope of the prohibition. In particular, the principles make clear that, in considering whether conduct is unconscionable, a court may consider the terms of the contract and is not limited to considering the circumstances relating to formation of the contract. This is a potentially significant development because courts had tended to interpret the prohibition on unconscionable conduct as applying to exploitative conduct occurring in the process of contract formation and as not applying to the terms or performance of the contract. An overly harsh or opportunistic enforcement of contract terms might now be challenged as unconscionable contrary to the ACL or the ASIC Act.

JEANNIE PATERSON teaches law at the Melbourne Law School. Jeannie canvassed these changes in DUAO, Vol 36(4) 271.

Cite as

(2012) 37(1) AltLJ 60