Brief Notes RE Exam - Week 13 PDF

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Contracts Review Act and The Australian Consumer Law (WILL BE IN EXAM MIXED INTO A QUESTION ON MAYBE BREACH OF CONTRACT) Go in with an answer that shows where the contracts review act might be applicable Need facts in the question that are about unconscionable conduct and unfairness between the parties. The person with the more power in the relationship will try and insist on the provision. PowerPoint Slides 

Unjust Contracts o The concept of the “unjust contract” does not exist at common law or equity. o For equity or the common law to intervene, the case must proceed under a recognised doctrine such as misrepresentation, mistake, duress, undue influence or unconscionable dealing. o The remedy affixed to these doctrines is rescission which restores the parties to their pre-contractual positions and extinguishes right to damages or specific performance.

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Contracts Review Act 1980 (NSW) o This Act avoids these limitations at common law and equity by permitting ‘judicial review of certain contracts and the grant of relief in respect of harsh, oppressive, unconscionable or unjust contracts’ (Preamble). o There must be a contract formed in law: Ford v Perpetual Trustees Victoria Ltd (2009) 75 NSWLR 42, 68 (Allsop P and Young JA).

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Principal Relief under CRA o The Act is triggered by a Court finding under section 7(1) that ‘a contract or a provision of a contract’ was ‘unjust in the circumstances relating to the contract at the time it was made’. o Relief may be granted if the court ‘considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result’: section 7(1).

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The standard for relief o ‘“Unjust” includes unconscionable, harsh or oppressive, and “injustice” shall be construed in a corresponding manner’: section 4. o Consider the scope of ‘unjustness’ identified in West v AGC (Advances) Ltd (1986) 5 NSWLR 610, 620-1 (McHugh JA).

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Matters the Court considers o Section 9 establishes the matters which the court must consider in coming to a finding of injustice under section 7(1). o The Court will have regard to the public interest and to all circumstances of the case, including such results as those arising in the event of compliance, non-

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compliance or contravention of any or all of the provisions of a contract: section 9(1). Specific matters: Section 9(2) (a) inequality of bargaining power (b) Whether provisions subject to negotiation (c) Whether reasonable for party to negotiate alternate or reject provisions (d) Reasonableness of terms (e) Whether age or physical/mental capacity impaired ability to protect interests (f) Economic, literacy and educational circumstances (g) Whether contract written, intelligible, its physical form (h) Whether independent legal or expert advice obtained (i) Extent to which legal and practical effect explained (j) Whether undue influence or unfair tactics or pressure (k) Conduct in similar dealings (l) The setting, purpose or effect of contract

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Who can’t seek a grant of relief? o The Crown, a public or local authority or a corporation may NOT be granted relief: section 6(1). o A person may NOT be granted relief in relation to a contract so far as the contract was entered into in the course of or for the purpose of a trade, business or profession (other than a NSW farming undertaking): section 6(2).

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Australian Consumer Law (ACL) o 1 January 2011 – Introduction of a new unitary national consumer and competition law which replaces the Trade Practices Act 1974 (Cth) and many State and Territory consumer protection laws. o Enforcement - ACCC, ASIC and State and Territory Fair Trading agencies.

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Unfair Contracts Terms (UCT) o Applies to “consumer contracts” only. o A consumer contract is defined as ‘a contract for a supply of goods or services or a sale or grant of an interest in land to an individual whose acquisition of the goods, services or interest is wholly or predominantly for personal, domestic or household use or consumption’. (CCA, Sch 2, Pt 2-3, s23(3); ASIC Act, s 12 BF)

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A consumer contract is void if: o The term is unfair; and o The contract is in a standard form contract; and o In the context of the ASIC Act, the contract is a financial product or a contract for the supply, or possible supply, of services that are financial services.

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A term in a consumer contract is unfair if the term: o Causes a significant imbalance in the parties’ rights and obligations under the standard form contract.

o Is not reasonably necessary to protect the legitimate interests of the party who would be advantaged by the term. o Term may be severed if operation of contract not affected. 

Rebuttable Presumption o There is a rebuttable presumption that an unfair term is not reasonably necessary to protect the legitimate interest of the party who would be advantaged by the application or reliance on that term, unless that party can prove otherwise.

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Factors to consider to find unfairness o Court may take any matters into account it considers to be relevant; o Court must consider the extent to which it would cause detriment, or likely detriment, to a party if the term was to be applied; o Court must consider the extent to which a term is transparent; and o Court must consider the contract as a whole.

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Examples of unfair terms o One party has unilateral right of termination; o Right of one party to sue the other is limited; o One party may assign their rights under the contract without assent of the other; o The right to vary the terms is limited to one party and the terms may be varied by that party without the consent of the other.

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Standard Form Contracts Not defined in the UCA. Court will consider: o o o o

Relative bargaining positions; The preparation of the contract; The negotiation (if any) of terms; Any special characteristics of either party.

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Competition and Consumer Act 2010 (Cth) o National product safety system; o Reforms Fair Trading laws; o Guarantees consumer rights when purchasing goods and services; o Applies principles of unconscionable conduct to formation and terms of consumer contracts and subsequent behaviour of parties; and o Applies to unsolicited goods.

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ACL as ‘remedial smorgasbord’ The ACL permits compensatory orders and remedial orders to be made by the court: o Damages – ss 236(1), 237 and 238 o Rescission – s 243(c)(d) o Specific Performance – ss232, 237-239 and 243(f)(g) o Injunctions – s232

o Rectification – s243(b)(c) and (h) o Declarations – s163A of the CCA o Remedies relating to Consumer Guarantees – ss 51-57, 60-63, 259 SCAFFOLD ISSUE Is there a remedy under the Contracts Review Act 1980 NSW for unjust contract or provision of the contract between the parties. RULE Remedy under the CRA -

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Paraphrase >>> Contracts Review Act 1980 NSW s 7 where the court finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made the court may, if it considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result, do any one or more of the following: (see legislation) (a) It may decide to refuse to enforce any or all of the provisions of the contract, (b) It may make an order declaring the contract void, in whole or in part, (c) It may make an order varying in whole or in part any provision of the contract, s 4 definitions “unjust” includes unconscionable, harsh or oppressive, and “injustice” shall be construed in a corresponding manner. “a contract may be unjust under the Act because of its terms, consequences or effects are unjust. This is substantive injustness. Or a contract may be unjust because of the methods used to make it. This is procedural injustness. Most unjust contracs will be the product of both procedural and substantive injustice” (p 402 Mc Hugh West Case) o Case: West v AGC (Advances) Ltd Unjustness not just limited to the definition. Broader than the definition. Identify one or more of the Section 9(2) provisions below with reference to scenario facts. Without in any way affecting the generality of subsection (1), the matters to which the court shall have regard shall, to the extent that they are relevant to the circumstances, include the following: (a) inequality of bargaining power (b) Whether provisions subject to negotiation (c) Whether reasonable for party to negotiate alternate or reject provisions (d) Reasonableness of terms (e) Whether age or physical/mental capacity impaired ability to protect interests (f) Economic, literacy and educational circumstances (g) Whether contract written, intelligible, its physical form (h) Whether independent legal or expert advice obtained (i) Extent to which legal and practical effect explained (j) Whether undue influence or unfair tactics or pressure (k) Conduct in similar dealings (l) The setting, purpose or effect of contract

APPLICATION

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s 7 provides a remedy of unenforceable, rescission Identify the relevant facts from the question as to why the conduct is “unjust” (i.e. unconscionable, harsh or oppressive). You will have maybe three facts to support the definition S 9 you need to for each fact find a category in s 9(2) (a) to (l) A court may have regard to s 9(2) when deciding on making an order under s 7. Finding the court will most likely either: not enforce the provision, make the provision void or vary the provision. It is likely that the court will not enforce the provision (if unjust).

CONCLUSION Yes

EXAMPLE SCENARIO Bob was thinking about entering into a lease for a corner shop. The cornershop was owned by Donald Trump. The lease was sent to Bob who made some comments on the lease. He sent the lease to Donald who responded with ‘I’m not taking any of your comments’. Bob had some difficulty reading the response. Bob then entered the lease with Donald. Sometime later Donald decided to terminate the lease because Bob didn’t pay on time. The lease required Bob to pay exactly on the due date. Advise Bob.

Do exam from Spring 2015 exam. Question three is on restitution (week 6)....