Australian (nsw) Misrepresentation

Historically, under common law there has been a strong aversion to hold in favour of a plaintiff in cases where unconscionable actions are shown when entering into contracts.

The original legal provisions that would grant relief in matters of unconscionable conduct were established in Courts of Equity. In matters of this type, the plaintiff would have to show ‘special disadvantage’ . Once proven, then it was upon the defendant to display that their actions were not overly influencing during negotiations.

Recent changes within common law and statute law, have reflected changing social values and the reviewing of cases like Printing & Numerical Registering Co v Sampson , where the Courts would not interfere in a bargain between men, if voluntarily entered to. It can now be said that the scope for the courts to grant relief has been substantially widened.

Mason J stated in Commercial Bank of Australia v Amadio at 462, that the Courts would grant relief to an innocent party if it could be seen that the other party not informing the innocent party of their true position uses an unconscionable advantage to remove the autonomous and voluntary nature of negotiation. Furthermore, failure to make a proactive effort to inform a third party to negotiations of their exact obligations might give grounds for the third party to avoid their obligation .

Hence, where no genuine agreement between parties is found, on the grounds of unconscionable conduct, the remedies that are available under common law is to declare the contract unenforceable.

With the creation of the Trade Practices Act 1974 (Cth) and more recently Contracts Review Act 1980 (NSW) the Courts have now obtained wide discerning powers to grant relief in matters of unconscionable conduct. Section 9 of the Contracts Review Act 1980 (NSW) outlines factors the courts should consider when adjudicating on cases of unconscionable contracts .

Matters brought before the Court under the Contracts Review Act with an affirmative outcome will be open to a wide range of relief. If the Courts sees fit it can set aside the contact by declaring it void. However, the Court can choose to re-write the contract to remove the harsh or unconscionable segments of the agreement. So it can be said that state legislation has increased the powers of common law rather than alter its position.

The Trade Practices Act 1974 (Cth) was amended in 1992 to add part IVA into the provisions. This addition intended to deal specifically with unconscionable conduct through sections 51AA, 51AB and 51AC .

· Section 51AA states that a corporation should not act in an unconscionable way when entering into business, trade or commerce.

· Section 51 AB deals with unconscionable conduct by corporations when dealing with consumers.

· Section 51 AC is concerned with unconscionable conduct between parties with one of them being a corporation, regarding matters for the cost of goods of $1 million or less.

For a breach of section 51(AA)(AB)(AC) to occur, a weaker party needs to establish that, (A) The weaker party was under a special disability, (B) The stronger party knew or ought to have known of that special disability, and

(C) The strong party took unfair advantage of that situation .

If above three points can be established, the court can make orders in accordance with section 87(1A). Simply put, section 87 allows the Court to make orders that it thinks appropriate against a person who might have engaged in unconscionable conduct. The orders out lined in subsection (1A) states that the Court may compensate for;

· Loss or damage,

· Prevent or reduce the loss or damage suffered,

· Declare the whole or any part of a contract void,

· Declare a collateral contract void.

Section (2) goes much further in outlining the relief available to the Courts.

· Orders varying the contract and setting the date of the order prior to its creation to correct past unconscionability.

· Orders rescinding any part of the contract

· Refund money or return property

· Loss or damage the amount of the loss or damage

· To repair or provide parts

· To supply specified services

· Orders to transfer property.

· Enhance the welfare of Australians

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