THE LAW OF COMMERCIAL CONTRACT Unconscionable Conduct Part IVA Trade Practices Act Sweeney & O’Reilly 1 st Ed. pp 61 – 64 2 nd Ed. Pp

THE LAW OF COMMERCIAL CONTRACT s51AA (1) Trade Practices Act  A corporation must not, in trade or commerce, engage in conduct that is unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories.  Applies only to consumer contracts

THE LAW OF COMMERCIAL CONTRACT s51AB (1) Trade Practices Act  A corporation shall not, in trade or commerce, in connection with the supply or possible supply of goods or services to a person, engage in conduct that is, in all the circumstances, unconscionable.  Applies only to consumer contracts

THE LAW OF COMMERCIAL CONTRACT s51AB (2) Trade Practices Act  Provides a non-exhaustive list of matters a Court can have regard to in determining if unconscionable conduct has occurred  Court may have regard to:  the relative strengths of the bargaining positions of the corporation and the consumer  Whether conditions were not reasonably necessary for the protection of the legitimate interests of the corporation

THE LAW OF COMMERCIAL CONTRACT s51AB (2) Trade Practices Act  Court may have regard to (cont.):  Whether the consumer was able to understand any documents  Undue influence and unfair tactics  The cost of identical goods\services

THE LAW OF COMMERCIAL CONTRACT Exclusions  The Court shall not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention (s51AB(4) TPA)  Instituting legal proceedings\arbitration is not unconscionable conduct (s51AB(3) TPA)

THE LAW OF COMMERCIAL CONTRACT s51AC(1) Trade Practices Act  Designed to cover small businesses  A corporation must not engage in unconscionable conduct:  in trade or commerce  in connection with  the supply of goods or services to a person (other than a listed company)  the acquisition of goods or services from a person (other than a listed company)  Limited to contracts under $1 million

THE LAW OF COMMERCIAL CONTRACT s51AC(3) Trade Practices Act  Provides a non-exclusive list of matters court can take into account  Similar to s51AB(2) Trade Practices Act but also  Whether the suppliers conduct was consistent with similar transactions with others  Industry codes applicable to the supplier  Industry codes that the business consumer reasonably believed applied to the supplier

THE LAW OF COMMERCIAL CONTRACT s51AC(3) Trade Practices Act (cont.)  Matters to be taken into account (cont.)  Unreasonable failure by supplier to disclose its intended conduct and risks to business consumer from that behaviour  The degree to which the supplier was willing to negotiate terms  The extent to which the supplier and business consumer acted in good faith

THE LAW OF COMMERCIAL CONTRACT Torts The Law of Negligence Sweeney & O’Reilly 1 st Ed, pp 42 – 49 2 nd Ed. Pp

THE LAW OF COMMERCIAL CONTRACT Definition  Conduct falling below the standard demanded for the protection of others against unreasonable risk of harm  This means that a person can sue for negligence when he is injured by another person who either:  Did an act which a reasonable person in the circumstances would not have done (an act of negligence); or  Failed to do an act that a reasonable person in the circumstances would have done (negligence by omission); and that action or failure caused the injury.

THE LAW OF COMMERCIAL CONTRACT Elements of Negligence 1.Defendant owed a duty of care to the plaintiff to take reasonable care to prevent him for suffering injury, loss or damage 2.There was a breach of the duty of care by failing to adhere to the standard of care expected 3.The breach of duty caused damage to the plaintiff 4.The plaintiff suffered damage that was of a kind which was reasonably foreseeable i.e. was not too remote

THE LAW OF COMMERCIAL CONTRACT Duty of Care – Physical Damage Two part test:  Reasonable foreseeability test  Proximity relationship test

THE LAW OF COMMERCIAL CONTRACT Reasonable foreseeability test  A reasonable person, in the circumstances of the defendant, would have reasonably foreseen that because of his actions there was a risk of injury to the plaintiff, or to a class of persons of whom the plaintiff was a member

THE LAW OF COMMERCIAL CONTRACT Reasonable foreseeability test (cont.)  BEFORE the damage occurred, a reasonable person could foresee SOME kind of damage COULD occur  Donoghue v Stevenson (S&OR p17\21)  Grant v Australian Knitting Mills (S&OR p23\36)  Levi v Colgate-Palmolive (S&OR p19\23)

THE LAW OF COMMERCIAL CONTRACT Proximity Test  There was sufficient proximity or closeness between the plaintiff and the defendant  This limits the Reasonable Foreseeability test  Used to limit duty of care on public policy grounds  The “neighbour” test  Donoghue v Stevenson (S&OR p18\22)

THE LAW OF COMMERCIAL CONTRACT Proximity Test Justice Deane in Jaensch v Coffey (1984) 151 CLR 549 stated that proximity could be established in one of 3 ways:  Physical proximity  Circumstantial proximity  Causal proximity

THE LAW OF COMMERCIAL CONTRACT Duty of Care – Financial Loss  Recovery of “pure economic loss” was denied by the courts for many years as economic effects may be more extensive than physical effects  Now allowed, but very narrow application  Hedley Byrne V Heller & Partners (S&OR p49\69)  Difficult to Develop tests to avoid too onerous a duty

THE LAW OF COMMERCIAL CONTRACT Duty of Care – Financial Loss (cont.) Perre v Apland (S&OR p21\30) suggests limits;  Whether plaintiff belonged to a determinate or an indeterminate class  Plaintiff’s vulnerability & dependency on defendant  Defendant’s knowledge of plaintiff’s vulnerability  Whether defendant assumed responsibility for the risk being taken by the plaintiff Applied in Johnson Tiles v Esso (2 nd Ed. P 32)

THE LAW OF COMMERCIAL CONTRACT Breach of Duty  Defendants will breach their duty of care if they fail to live up the standard of care expected in the circumstances  An objective test  A 2 stage process

THE LAW OF COMMERCIAL CONTRACT Breach of Duty (cont.)  First stage:  Would a reasonable person believe that the risk of injury to the plaintiff was reasonably foreseeable; and  Would a reasonable person have responded to that risk at all and, if so, how.  Actions of defendant are compared with what a reasonable person would\would not have done

THE LAW OF COMMERCIAL CONTRACT Breach of Duty (cont.)  The degree of care expected in any particular case depends on all the surrounding circumstances  May vary according to:  amount of risk, and  seriousness of the injury foreseen  If a person claims special skills then they must live up to the standard of the reasonable expert in that field

THE LAW OF COMMERCIAL CONTRACT The Standard of Care Factors in assessing the standard of care:  Probability of the risk occurring  O’Dwyer v Leo Buring (S&OR p22\35)  Gravity of the injury  Rasbora v JCL Marine Ltd (S&OR p 23\35)  Adelaide Chemical v Carlyle (S&OR p24\37)

THE LAW OF COMMERCIAL CONTRACT The Standard of Care  Practicability and cost of eliminating risk  Norton v Streets Ice Cream (S&OR p24\37)  Age and capacity of the plaintiff  Social value of defendant’s action  Common practice

THE LAW OF COMMERCIAL CONTRACT Causation  A question of fact  The “but for” test “If you can say that the damage would not have happened but for a particular fault, then that fault is in fact a cause of the damage; but if you can say that the damage would have happened just the same, fault or no fault, then fault is not the cause of the damage” per Denning LJ in Cork v Kirby Maclean (1952) 2 All ER 402

THE LAW OF COMMERCIAL CONTRACT Causation (cont.)  If a number of factors contribute to loss, the “but for” test may not be conclusive  Did the defendant’s act or omission “materially contribute” to the plaintiff’s loss?

THE LAW OF COMMERCIAL CONTRACT Causation (cont.)  Must prove each element of the causal link  Kenny & Good v MGICA (S&OR p 49\71)  Defendant will not be liable if the plaintiff’s loss was inevitable  Chapel v Hart (S&OR p26\40)

THE LAW OF COMMERCIAL CONTRACT Damage Plaintiff must prove that:  Damage is of a kind recognised by law  e.g. loss of income, pain & suffering etc.  Damage was of a kind that was reasonably foreseeable  Damage will be foreseeable when the risk of damage is a real risk which would occur to the mind of a reasonable man in the defendant’s position and which he would not brush aside as far-fetched

THE LAW OF COMMERCIAL CONTRACT Defences to Negligence  Contributory Negligence  Voluntary Assumption of Risk  Novus Actus Interveniens  Illegal enterprise  Statutory Reforms

THE LAW OF COMMERCIAL CONTRACT Contributory Negligence  If the plaintiff  failed to take precautions for his own safety  Such failure contributed to his injury Then the plaintiff’s compensation is reduced  Damages are apportioned according to the relative degree to which the parties negligence contributed to the loss  Partial defence  Burden on the defendant

THE LAW OF COMMERCIAL CONTRACT Voluntary Assumption of Risk  Volenti non fit injuria  Defendant must prove  Plaintiff knew of the risk  Plaintiff fully appreciated the risk  Plaintiff accepted the risk freely and willingly  Consent can be express or implied  A total defence  Burden of proof is on the defendant  Moore v Woodforth (S&O 2 nd Ed. p 43)

THE LAW OF COMMERCIAL CONTRACT Statutory Reforms  Each State is different  Persons engaged in risky recreational pursuits are assumed to be aware of the risks  Protection for Good Samaritans and volunteers acting in good faith