unconscionable conduct
Contract Law - Question 1
1. Discuss what is meant by ‘unconscionable conduct’. Explain how unconscionable conduct might affect the validity of a contract. In your answer, you should include a discussion of any relevant statute law and at least one relevant case.
Unconscionable conduct is a broad concept in contract law that involves several doctrines and can be understood at different levels of breath. It is generally referred to as ‘conduct which is wholly unreasonable and is not guided or restrained by conscience’1. It occurs in situations where ‘a party makes unconscientious employment of their bargaining power to the detriment of a party who suffers from some special disability or is placed in a position of disadvantage’2. Disability, in this situation, refers to something that affects the ability of the innocent party to ‘reach a judgement which is in their best interests’3. Disadvantage on the other hand, is constituted by 'poverty, sickness, sex, age, infirmity of body or mind, illiteracy and lack of help or explanation where assistance or explanation is necessary'4.
The concept deals with principles such as undue influence, duress, unconscionable dealing, equitable estoppel and misrepresentation5. These factors all play a key role in aiding courts establish a contract’s validity. It must be noted however, that there is no strict rule used by the courts to ascertain whether or not specific conduct constitutes unconscionability. Moreover, it depends on the nature of each and every case and is up to the court’s discretion to decide whether or not unconscionable conduct exists6. Nevertheless, if a party is to claim a contract is unconscionable, they will have to demonstrate to the court that both substantive and procedural injustice7 was incurred. In particular with regard to the Contracts Review Act, the most successful cases against unconscionable conduct are the ones which involve some form of procedural injustice8. Furthermore, the Competition
1. Discuss what is meant by ‘unconscionable conduct’. Explain how unconscionable conduct might affect the validity of a contract. In your answer, you should include a discussion of any relevant statute law and at least one relevant case.
Unconscionable conduct is a broad concept in contract law that involves several doctrines and can be understood at different levels of breath. It is generally referred to as ‘conduct which is wholly unreasonable and is not guided or restrained by conscience’1. It occurs in situations where ‘a party makes unconscientious employment of their bargaining power to the detriment of a party who suffers from some special disability or is placed in a position of disadvantage’2. Disability, in this situation, refers to something that affects the ability of the innocent party to ‘reach a judgement which is in their best interests’3. Disadvantage on the other hand, is constituted by 'poverty, sickness, sex, age, infirmity of body or mind, illiteracy and lack of help or explanation where assistance or explanation is necessary'4.
The concept deals with principles such as undue influence, duress, unconscionable dealing, equitable estoppel and misrepresentation5. These factors all play a key role in aiding courts establish a contract’s validity. It must be noted however, that there is no strict rule used by the courts to ascertain whether or not specific conduct constitutes unconscionability. Moreover, it depends on the nature of each and every case and is up to the court’s discretion to decide whether or not unconscionable conduct exists6. Nevertheless, if a party is to claim a contract is unconscionable, they will have to demonstrate to the court that both substantive and procedural injustice7 was incurred. In particular with regard to the Contracts Review Act, the most successful cases against unconscionable conduct are the ones which involve some form of procedural injustice8. Furthermore, the Competition