UNCONSCIONABILITY Unconscionable dealing looks to the conduct of the stronger party in

attempting to enforce, or retain the benefit of, a dealing with a person under a special disability in circumstances where it is not consistent with equity or good conscience that he should do so. Mason J (Amadio): unconscientious use of superior position to the detriment of a party who suffers from some special disability or is in some special situation of disadvantage. Common Law Elements: (apply to all cases of unconscionability) Harshness not enough for rescission Rescinded if induced by fraud, duress, undue influence, mistake, misrep. or harsh/onerous term not Equity (Equitable Remedy for Unconscionability = rescission.) To argue unconscionability must establish all elements (Deane J in Amadio): V is under a special disadvantage or disability; (raising the presumption of unconscionability) D knew, or is likely to have known, about that disadvantage; and D proceeds to use knowledge unconscientiously in order to obtain Vs consent to transaction. (Also 3rd Party Uncons.) BUT Unconscientious exploitation of anothers inability, or diminished ability, to conserve his or her interests not to be confused with taking advantage of a superior bargaining position. (ACCC v Berbatis) Special disadvantage or disability = a serious disadvantage leading to a lack of true consent. Blomley v Ryan: poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary CBA v Amadio - some characteristic seriously affects ability of innocent party to make judgment as to own Constitutional special disadvantage, deriving from age, illness, poverty, inexperience, lack of education.

Knowledge requirement necessary because D cant be said to have acted Situational, deriving from relationship such as unconscientiously if no knowledge of the emotional dependence of one on the other in the plaintiffs special disadvantage. Cases Amadio special disadvantage knowingly used to procure signing a contract of guarantee, not limited by time or extent of liability, to secure a loan to son who was in serious financial trouble. Louth v Diprose infatuated Diprose made a gift of $58,000 to Louth so that she could purchase a house. Blomley v Ryan drunken Ryan sold entire landholding to Blomley at a price described by McTiernan J as strikingly disproportionate to the estimated market value. See Bridgewater v Leahy also. Third Party Unconscionability (Garcia) Remedy = Impropriety of a THIRD party depends on: Rescission a. Is there a vitiating factor in rship b/w A The Garcia principle enables guarantee contracts to be and B? set aside in some circumstances. The elements of the b. If so, ought C (Bank) be affected by principle are: vitiating factor? 1. Relationship of trust and confidence b/w debtor FIRST: answer by reference to vitiating and guarantor factors: misrepresentation, duress, UDI, 2. Guarantor is a volunteer unconscionable dealing. 3. Guarantor did not understand the transaction SECOND: What are circumstances of the case, 4. Creditor knew / ought to have known of such that C should be bound by Bs relationship impropriety? 5. Creditor has failed to: a. If party C (Bank) knows of impropriety of a. Ensure guarantor obtains independent advice As conduct with B, indicates C should be (where there is undue influence); or bound by Bs impropriety (e.g. knowledge of b. Adequately explain guarantee to guarantor rship of UDI i.e. husband/wife; knew debtor Rebutting a presumption of Statutory coerced/misled guarantor). Remedy unconscionability TPA s b. If C (Bank) relies on A getting agreement of 51AA (1) prohibits corp. engaging in conduct B, then, lender should suffer the same If a special disability is established (raising the unconscionable within meaning of the unwritten consequences as B. presumption of unconscionability) the contract law; s 51AB (1) prohibits conduct in all may be enforceable if the stronger party can circumstances unconscionable; s 51AB (2) lists show there was no advantage taken of the factors relevant to court determining whether the disadvantaged person. This could occur where: conduct is unconscionable; 51AC protects small business There is adequate consideration (evidential CRA (NSW) Business to Consumer, Private to only) Private: Unjust = harsh or oppressive in s 4; s 7 Independent advice (though not necessary deals with relief , vary in whole part any provision, may save a transaction but absence may be fatal void; s 8 provides ancillary relief where just; s 9 non(Lloyds Bank v Bundy) exhaustive list of factors court may consider to determine an unconscionable dealing. (not necessary