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Report No. 199

Section 7 which deals with 'principal relief in respect of unjust contracts reads as follows:

"Principal relief:(1) Where the Court finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made, the Court may, if it considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result, do any one or more of the following:

(a) it may decide to refuse to enforce any or all of the provisions of the contract,

(b) it may make an order declaring the contract void, in whole or in part,

(c) it may make an order varying, in whole or in part, any provision of the contract,

(d) it may, in relation to a land instrument, make an order for or with respect to requiring the execution of an instrument that:

(i) varies, or has the effect of varying, the provisions of the land instrument, or

(ii) terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the land instrument.

(2) where the Court makes an order under subsection (1)(b) or (c), the declaration or variation shall have effect as from the time when the contact was made or (as to the whole or any part or parts of the contract) from some other time or times as specified in the order.

(3) The operation of this section is subject to the provisions of section 19".

Section 8 refers to ancillary relief which could by granted by a Court. Section 8 reads as follows:-

"Ancillary relief.-Schedule 1 has the effect with respect to the ancillary relief that may be granted by the Court in relation to an application for relief under this Act."

The CRA (NSW) is not limited to "standard" terms although whether a term was negotiated or not is a consideration for the court. Sections 9(2) (d) and (g) in particular lean towards the substantive issues. A person's rights under the Act cannot be excluded or restricted in any way. The Act also provides a mechanism for relief by an individual consumer on a case by case basis, and for grant of systemic relief is possible under section 10 as under:

"Where the Supreme Court is satisfied, on the application of the Minister or the Attorney General, or both, that a person has embarked, or is likely to embark, on a course of conduct leading to the formation of unjust contracts, it may, by order, prescribe or otherwise restrict, the terms upon which that person may enter into contracts of a specified class."

The Act vests the Supreme Court and the District Court with jurisdiction to consider contracts under the Act (while the jurisdiction of the Local Court and the Consumer, Trader and Tenancy Tribunal is more limited). The District Court's jurisdiction depends on its monetary jurisdictional limit. In general, the provisions of the CRA may be used either in actions commenced specifically or by way of defence in other proceedings arising out of, or in relation to, the contract.

While it appears that the NSW Court described the Act as a 'revolutionary legislation whose evident purpose is to overcome the common law's failure to provide a comprehensive doctrinal framework to deal with 'unjust' contracts (West v. AGC (Advances) (1986)(5) NSWCR 610, the Act was criticized for failing to distinguish between procedural and substantive unconscionability as 'the list of fact or, to which the Court is required to have regard, in determining whether a contract is unjust, is a mish-mash of process-oriented and outcome oriented considerations' (Duggan (1991)17 Mon LR' some reflection s on common provision and the law reform process".

Unfair (Procedural and Substantive) Terms in Contract Back

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