Is it illegal to induce a non-English speaking person to sign a contract written in English? What about to deliberately convolute terms in a contract to create a sense of confusion and unnecessary pressure? These actions could be considered unconscionable conduct and punishable by law.

Consequently, both businesses and consumers should understand what is unconscionable conduct and how to protect themselves.

We’ve made a guide to help further this understanding. If you think you need additional advice about this sort of conduct, you will benefit from a consultation with an experienced business lawyer.

What is unconscionable conduct?

Unconscionable conduct is a statement or action that is considered so unreasonable that it defies good conscience. The definition is so general because there is no precise definition of unconscionable conduct at law.

It’s designed to be this broad to capture all the creative ways people engage in to make a sale. The courts have ruled that to be considered unconscionable, the conduct must be more than simply unfair – it must be against the conscience as judged against society’s norms. For example, courts have held that inducing an alcoholic to drink a bottle of rum while entering into negotiations defies good conscience.

Along with the courts, there are some provisions under the Competition and Consumer Act 2010 that also govern unconscionable conduct.

Situations where unconscionable conduct is prohibited

Unconscionable conduct is prohibited when:

  • Selling or supplying goods and services to a customer; or
  • Supplying or acquiring goods and services to or from a small business.

This means that it can happen in any ordinary transaction, at any time.

Examples of unconscionable conduct

When deciding whether conduct is unconscionable or not, the court looks at a number of factors on a case-by-case basis. Here are a few examples:

  • Not allowing enough time to read a contract, ask questions or seek advice;
  • Compelling someone to sign a blank agreement;
  • Refusing to take ‘no’ as an answer to create high pressure;
  • Knowing a person does not speak English or has a learning disability and not explaining the conditions of a contract to them;
  • Using a friend or relative to influence the consumer’s decision

These all revolve around exploiting a disadvantage or disability. This is not an exhaustive list and the court can consider anything that it considers relevant to the case.

What consumers should look out for

Unconscionable conduct affecting consumers is covered under section 21 of the Competition and Consumer Act 2010 . As a consumer, it’s important that all commercial agreements are in writing, that you fully understand all the terms and don’t sign any agreement without reading them all carefully. It might help to ask for plain language explanations, as jargon can be confusing. Independent legal advice should be sought if you’re still feeling unsure. Lastly, if you feel like you are being pushed into signing something – don’t do it. If it doesn’t feel right, then it’s best to follow up.

What small businesses should look out for

Unconscionable conduct affecting small businesses is covered under section 22 of the Competition and Consumer Act 2010. Business behaviour may be considered unconscionable if it is harsh or oppressive to an extent that it is beyond “tough commercial bargaining”. Businesses should be careful not to exploit the other party when negotiating, especially when they have vulnerabilities that you can play to your advantage. To avoid this, clearly explain any important terms of the contract, and consider providing a summary of the contract too. Most importantly, if things go wrong, be open to resolving any complaints.

What happens if my conduct is found to be unconscionable?

No one likes being taken to court, but this is where all unconscionable conduct matters are resolved. Remedies such as compensation, voiding the contract and financial penalties are just a couple of examples of what the court might order.

Final Thoughts

For consumers – let your head do the thinking and not the other party persuading you to sign. For businesses – let your persuasiveness remain at an ethical level. If you’re not sure where this fine line is in the big bad business world, then it’s a good idea to consult with a business lawyer.

LawPath has access to highly qualified business lawyers who can assist with the purchase of your future business. Contact a LawPath consultant on 1800LAWPATH to learn more about customising legal documents, obtaining a fixed-fee quote from our network of 600+ expert lawyers or to get answers to your legal questions.

Tiana Podinic

Tiana is a Paralegal, working in our content team, which aims to provide free legal guides to facilitate public access to legal resources. With a strong interest in commercial law, her research focuses on the revolutionising legal sphere and the implications for all involved.