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Report No. 199

Australia: (substantive unfairness)

Under the (NSW) Contract Review Act, 1980, though section 6(2) states that a person may not be granted relief under the Act in relation to a contract so far as the contract was entered in the course for the purpose of a trade, business or profession - other than a farming undertaking - still, some of the provisions are quite useful.

Section 4 defines 'unjust' as including unconscionable, harsh or oppressive terms and 'injustice' is also to be considered in a corresponding manner.

Section 9 refers to matters to be considered by the Court in determining whether a 'contract' is 'unjust' and the matters relevant to 'substantive' unfairness.

Subsection (1) generally states that the Court will have regard to 'public interest' and all the circumstances of the case and to the following:

"section (2):

(a) ... ... ...

(b) ... ... ...

(c) ... ... ...

(d) whether or not any of the provisions of the contract impose conditions which are unreasonably difficult to comply with or not reasonably necessary for the protection of the legitimate interests of any party to the contract;

(e) ... ... ...

(f) ... ... ...

(g) where the contract is wholly or partly in writing, the physical form of the contract and the intelligibility of the language in which it is expressed;

(h) ... ... ...

(l) ... ... ..."

Executed contracts:

As already stated, section 14, the Act applies 'fully executed' contracts. Exclusion of provision of the Act is void under section 17 and an offence under section 18.

Uniform Consumer Credit Code 1993 is applicable to all States and Territories. It applies to credit transactions where credit is given for a variety of purposes including for real purposes 'unjust' contracts can be reopened. 'Unjust' includes 'unconscionable, harsh or oppressive'. section 70 contains procedural and substantive matters. List is similar to section 9(2) of the 1980 Act. The court can reopen transaction and set aside the contract wholly or partly. section 72 applies to unconscionable interest, fees or charges.

The Fair Trading Amendment Act 2003 (Victoria) amended the Fair Trading Act, 1999 and introduced provision similar to those in (UK) Unfair Terms in Consumer Contracts Regulations. A term is unfair is contrary to good faith (The UK Law Commission in its Report 2004, omitted good faith criteria). 'Standard form' contracts can be prescribed as unfair by regulation and it is an offence to use or recommend the use of a prescribed term.

Trade Practices Act, 1974 defines 'unconscionable' conduct in section AB(2) to

(a) ... ... ...

(b) whether, as a result of conduct engaged in by the corporation, the consumer was required to comply with conditions that were not necessary for the protection of the legitimate interests of the corporation;

(c) ... ... ...

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

(e) the amount for which and the circumstances under which, the consumer could have acquired identical or equivalent goods or services from a person other than the corporation.

Section 51AC(3) contains similar provisions.

Unfair (Procedural and Substantive) Terms in Contract Back

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