The Full Federal Court has decreed that “a sufficient departure from the norms of acceptable commercial behaviour” can now be made a test of whether conduct is “unconscionable” under Australian law.
The decision will ensure that egregious commercial conduct can be captured by the unconscionable conduct provisions under Australian Consumer Law without having to prove that the harmed small business or consumer has a special disadvantage or vulnerability that was exploited.
Australian Small Business and Family Enterprise Ombudsman Bruce Billson welcomed the ruling, describing it as a “a great day for Australian small businesses seeking protection from unconscionable conduct that can harm enterprises and livelihoods”.
Billson believes that the decision will provide reassurance for small businesses that remedies are available for the harm caused by the unconscionable conduct of a counterparty are available, and that fair and reasonable commercial dealings support smaller, local enterprises in cases involving them and a larger, more powerful corporation.
Billson congratulated the ACCC and its chair, Rod Sims, for appealing an earlier Federal Court decision that required that a business could only be found to have acted “unconscionably” under the Australian Consumer Law and other similar laws if it had exploited some disadvantage or vulnerability on the part of the consumers or small businesses affected.
“While the exploitation of a disadvantage or vulnerability is an important criteria for establishing if a business has acted ‘unconscionably’, egregious conduct that causes harm to another business cannot be acceptable purely by the absence of this specific form of exploitation,” Billson said. “We look forward to seeing further protections for small businesses through changes to the unfair contract terms legislation in the near future.”
