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Report No. 199

Australia (procedural unfairness):

In Australia, as far as 'procedural' unfairness is concerned, the Discussion Paper (2004) of the Standing Committee of Officials of Consumer Affairs concluded that the Australian Law had responded to procedural unfairness, that is to the circumstances leading up to and/or at the time of making of the contract which create unfairness (but that the Courts have been reluctant to find unfairness on substantive grounds) and that the current statutory regimes have created some confusion in practice because of their failure to distinguish between procedural and substantive unfairness.

The NSW Contract Review Act, 1980, has, as already stated in Chapter VII, been commented upon in the Discussion Paper as having failed to distinguish between procedural and substantive unconscionability. section 9 of that Act refers to matters to be considered by the court and so far as 'procedural' unfairness is concerned, subsection (2) thereof states:

"section 9(2):

(a) whether or not there was any material inequality in bargaining power between the parties to the contract,

(b) whether or not, prior to or at the time the contract was made, its provisions were the subject of negotiation,

(c) whether or not, it was reasonably practicable for a party seeking relief under the Act to negotiate for the alternative of or to reject any of the provisions of the contract,

(d) ... ... ... .... .....

(e) whether or not

(i) any party to the contract (other than a corporate) was not reasonably able to protect his or her interests, or

(ii) any person who represented any of the parties to the contract was not reasonably able to protect the interests of any party whom he or she represented, because of his or her age or the state of his or her physical or mental capacity,

(f) the relative economic circumstances, educational background and literacy of:

(i) the parties to the contract (other than a corporate) and

(ii) any person who represented any of the parties to the contract.

(h) whether or not and when independent legal or other expert advice was obtained by the party seeking relief under this Act,

(i) the extent (if any) to which the provisions of the contract and their legal and practical effect were accurately explained by any person to the party seeking relief under this Act and whether or not that party understood the provisions and their effect,

(j) whether undue influence, unfair pressures or unfair tactics were exerted on or used against the party seeking relief under this Act:

(i) by any other party to the contract,

(ii) by any other person acting or appearing or purporting to act for or on behalf of any other party to the contract, or

(iii) by any person to the knowledge (at the time the contract was made) of any other party to the contract or of any person acting or appearing or purporting to act for or on behalf of any other party to the contract,

(k) the conduct of the parties to the proceedings in relation to similar contracts or courses of dealing to which any of them has been a party, and

(l) the commercial or other setting and effect of the contract.

(3) For the purposes of subsection (2), a person shall be deemed to have represented a party to a contract if the person represented the party, or assisted the party to a significant degree, in negotiation prior to or at the time the contract was made.

(4) In determining whether a contract or a provision of a contract is unjust, the Court should not have regard to any injustice arising from circumstances that were not reasonably forseeable at the time the contract was made.

(5) In determining whether it is just to grant relief in respect of a contract or a provision of a contract that is found to be unjust, the Court may have regard to the conduct of the parties to the proceedings in relation to the performance of the contract since it was made.



Unfair (Procedural and Substantive) Terms in Contract Back




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