THE LAW OF COMMERCIAL CONTRACT Unconscionable Conduct Part IVA Trade Practices Act Sweeney & O’Reilly 1 st Ed. pp 61 – 64 2 nd Ed. Pp 88 -91

THE LAW OF COMMERCIAL CONTRACT

Unconscionable ConductPart IVA Trade Practices Act

Sweeney & O’Reilly

1st Ed. pp 61 – 64

2nd Ed. Pp 88 -91


s51AA (1) Trade Practices Act A corporation must not, in trade or commerce,

engage in conduct that is unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories.

Applies only to consumer contracts


s51AB (1) Trade Practices Act A corporation shall not, in trade or commerce, in

connection with the supply or possible supply of goods or services to a person, engage in conduct that is, in all the circumstances, unconscionable.

Applies only to consumer contracts


s51AB (2) Trade Practices Act Provides a non-exhaustive list of matters a Court

can have regard to in determining if unconscionable conduct has occurred

Court may have regard to: the relative strengths of the bargaining

positions of the corporation and the consumer Whether conditions were not reasonably

necessary for the protection of the legitimate interests of the corporation


s51AB (2) Trade Practices Act Court may have regard to (cont.):

Whether the consumer was able to understand any documents

Undue influence and unfair tactics The cost of identical goods\services


Exclusions The Court shall not have regard to any

circumstances that were not reasonably foreseeable at the time of the alleged contravention (s51AB(4) TPA)

Instituting legal proceedings\arbitration is not unconscionable conduct (s51AB(3) TPA)


s51AC(1) Trade Practices Act Designed to cover small businesses A corporation must not engage in unconscionable

conduct: in trade or commerce in connection with

the supply of goods or services to a person (other than a listed company)

the acquisition of goods or services from a person (other than a listed company)

Limited to contracts under $1 million


s51AC(3) Trade Practices Act Provides a non-exclusive list of matters court

can take into account Similar to s51AB(2) Trade Practices Act but also

Whether the suppliers conduct was consistent with similar transactions with others

Industry codes applicable to the supplier Industry codes that the business consumer

reasonably believed applied to the supplier


s51AC(3) Trade Practices Act (cont.) Matters to be taken into account (cont.)

Unreasonable failure by supplier to disclose its intended conduct and risks to business consumer from that behaviour

The degree to which the supplier was willing to negotiate terms

The extent to which the supplier and business consumer acted in good faith


Torts

The Law of NegligenceSweeney & O’Reilly

1st Ed, pp 42 – 49

2nd Ed. Pp20 - 45


Definition Conduct falling below the standard demanded for the

protection of others against unreasonable risk of harm

This means that a person can sue for negligence when he is injured by another person who either: Did an act which a reasonable person in the

circumstances would not have done (an act of negligence); or

Failed to do an act that a reasonable person in the circumstances would have done (negligence by omission);

and that action or failure caused the injury.


Elements of Negligence1. Defendant owed a duty of care to the plaintiff to

take reasonable care to prevent him for suffering injury, loss or damage

2. There was a breach of the duty of care by failing to adhere to the standard of care expected

3. The breach of duty caused damage to the plaintiff

4. The plaintiff suffered damage that was of a kind which was reasonably foreseeable i.e. was not too remote


Duty of Care – Physical DamageTwo part test: Reasonable foreseeability test Proximity relationship test


Reasonable foreseeability test A reasonable person, in the circumstances of

the defendant, would have reasonably foreseen that because of his actions there was a risk of injury to the plaintiff, or to a class of persons of whom the plaintiff was a member


Reasonable foreseeability test (cont.) BEFORE the damage occurred, a reasonable

person could foresee SOME kind of damage COULD occur Donoghue v Stevenson (S&OR p17\21) Grant v Australian Knitting Mills (S&OR

p23\36) Levi v Colgate-Palmolive (S&OR p19\23)


Proximity Test There was sufficient proximity or closeness

between the plaintiff and the defendant This limits the Reasonable Foreseeability test Used to limit duty of care on public policy

grounds The “neighbour” test

Donoghue v Stevenson (S&OR p18\22)


Proximity TestJustice Deane in Jaensch v Coffey (1984) 151 CLR 549 stated that proximity could be established in one of 3 ways: Physical proximity Circumstantial proximity Causal proximity


Duty of Care – Financial Loss Recovery of “pure economic loss” was denied

by the courts for many years as economic effects may be more extensive than physical effects

Now allowed, but very narrow application Hedley Byrne V Heller & Partners (S&OR

p49\69) Difficult to Develop tests to avoid too onerous

a duty


Duty of Care – Financial Loss (cont.)Perre v Apland (S&OR p21\30) suggests limits; Whether plaintiff belonged to a determinate or

an indeterminate class Plaintiff’s vulnerability & dependency on

defendant Defendant’s knowledge of plaintiff’s

vulnerability Whether defendant assumed responsibility for

the risk being taken by the plaintiffApplied in Johnson Tiles v Esso (2nd Ed. P 32)


Breach of Duty Defendants will breach their duty of care if

they fail to live up the standard of care expected in the circumstances

An objective test A 2 stage process


Breach of Duty (cont.) First stage:

Would a reasonable person believe that the risk of injury to the plaintiff was reasonably foreseeable; and

Would a reasonable person have responded to that risk at all and, if so, how.

Actions of defendant are compared with what a reasonable person would\would not have done


Breach of Duty (cont.) The degree of care expected in any particular

case depends on all the surrounding circumstances

May vary according to: amount of risk, and seriousness of the injury foreseen

If a person claims special skills then they must live up to the standard of the reasonable expert in that field


The Standard of CareFactors in assessing the standard of care: Probability of the risk occurring

O’Dwyer v Leo Buring (S&OR p22\35) Gravity of the injury

Rasbora v JCL Marine Ltd (S&OR p 23\35) Adelaide Chemical v Carlyle (S&OR

p24\37)


The Standard of Care Practicability and cost of eliminating risk

Norton v Streets Ice Cream (S&OR p24\37) Age and capacity of the plaintiff Social value of defendant’s action Common practice


Causation A question of fact The “but for” test

“If you can say that the damage would not have happened but for a particular fault, then that fault is in fact a cause of the damage; but if you can say that the damage would have happened just the same, fault or no fault, then fault is not the cause of the damage” per Denning LJ in Cork v Kirby Maclean (1952) 2 All ER 402


Causation (cont.) If a number of factors contribute to loss, the

“but for” test may not be conclusive Did the defendant’s act or omission

“materially contribute” to the plaintiff’s loss?


Causation (cont.) Must prove each element of the causal link

Kenny & Good v MGICA (S&OR p 49\71) Defendant will not be liable if the plaintiff’s

loss was inevitable Chapel v Hart (S&OR p26\40)


DamagePlaintiff must prove that: Damage is of a kind recognised by law

e.g. loss of income, pain & suffering etc. Damage was of a kind that was reasonably

foreseeable Damage will be foreseeable when the risk

of damage is a real risk which would occur to the mind of a reasonable man in the defendant’s position and which he would not brush aside as far-fetched


Defences to Negligence Contributory Negligence Voluntary Assumption of Risk Novus Actus Interveniens Illegal enterprise Statutory Reforms


Contributory Negligence If the plaintiff

failed to take precautions for his own safety Such failure contributed to his injury

Then the plaintiff’s compensation is reduced Damages are apportioned according to the

relative degree to which the parties negligence contributed to the loss

Partial defence Burden on the defendant


Voluntary Assumption of Risk Volenti non fit injuria Defendant must prove

Plaintiff knew of the risk Plaintiff fully appreciated the risk Plaintiff accepted the risk freely and willingly

Consent can be express or implied A total defence Burden of proof is on the defendant Moore v Woodforth (S&O 2nd Ed. p 43)


Statutory Reforms Each State is different Persons engaged in risky recreational

pursuits are assumed to be aware of the risks

Protection for Good Samaritans and volunteers acting in good faith

Documents

THE LAW OF COMMERCIAL CONTRACT Unconscionable Conduct Part IVA Trade Practices Act Sweeney & O’Reilly 1 st Ed. pp 61 – 64 2 nd Ed. Pp 88 -91