AUSTRALIA Trends and Developments Contributed by: Warren Scott, Stewart Levitt, Erik Purcell and Lachlan Speirs, ARCHER SCOTT Lawyers
Unconscionable conduct Good faith (discussed above) and unconscionable conduct are different legal concepts, both of which must be complied with by franchisors in Australia. Pursuant to Section 20 of the Australian Consumer Law, a person in trade or commerce must not engage in conduct this is unconscionable, within the meaning of the unwritten law from time to time. This is referencing the fact that there is no codification of what will amount to unconscionable conduct; what amounts to unconscionable conduct will be deter - mined by the courts in Australia on the merits and circumstances of each occasion in which are asked to make an assessment. However, Sections 21 and 22 of the Australian Con - sumer Law provide the following. • First, that the court must not have regard to any circumstances that were not reasonably foresee - able at the time of the alleged contravention of the duty not to engage in unconscionable conduct. • Second (without limiting the matters that the court may have regard to), the court may have regard to the following (this list relates to suppliers, and simi - lar provisions apply in respect of acquirers): (a) the relative strengths of the bargaining posi - tions of the supplier and the customer; (b) whether, as a result of conduct engaged in by the supplier, the customer was required to comply with conditions that were not reason - ably necessary for the protection of the legiti - mate interests of the supplier; (c) whether the customer was able to understand any documents relating to the supply or pos - sible supply of the goods or services; (d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the customer or a person acting on behalf of the customer by the supplier or a per - son acting on behalf of the supplier in relation to the supply or possible supply of the goods or services; (e) the amount for which, and the circumstances under which, the customer could have acquired identical or equivalent goods or services from a
person other than the supplier; (f) the extent to which the supplier’s conduct towards the customer was consistent with the supplier’s conduct in similar transactions be - tween the supplier and other like customers; (g) the requirements of any applicable industry code; (h) the requirements of any other industry code, if the customer acted on the reasonable belief that the supplier would comply with that code; (i) the extent to which the supplier unreasonably failed to disclose to the customer any intended conduct of the supplier that might affect the interests of the customer, or any risks to the customer arising from the supplier’s intended conduct (ie, risks that the supplier should have foreseen would not be apparent to the cus - tomer); (j) if there is a contract between the supplier and the customer for the supply of the goods or services: the extent to which the supplier was willing to negotiate the terms and conditions of the contract with the customer; the terms and conditions of the contract; the conduct of the supplier and the customer in complying with the terms and conditions of the contract; and any conduct that the supplier or the customer engaged in, in connection with their commer - cial relationship, after they entered into the contract; (k) without limiting the above, whether the sup - plier has a contractual right to vary unilaterally a term or condition of a contract between the supplier and the customer for the supply of the goods or services; and (l) the extent to which the supplier and the cus - tomer acted in good faith. In the matter of ACCC v Productivity Partners Pty Ltd (trading as Captain Cook College), the High Court of Australia has confirmed that the Act does not require a court to evaluate the impugned conduct by reference to the presence or absence of the circumstances the Act specifies, irrespective of the relevance of those circumstances to the impugned conduct or to the cases as put by the parties to the court. However, the Court has made clear that, insofar as a factor in the Act is applicable, “that matter must be considered. If
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