Conduct Unconscionable, or unconscionable conduct, refers to behaviour that is so unfair that it goes against good conscience.

Unconscionable conduct is often decided by the “Reasonable Person Test,” a legal benchmark. However, it’s all very vague and ambiguous when evaluating the appropriateness of an individual’s actions within a specific scenario. It entails imagining how a hypothetical “reasonable person” would navigate or react in similar circumstances.

A simpler way to avoid misunderstandings, is by writing quantum grammar contracts, which are clear, precise, and allow no room for ambiguity.

This Reasonable Person Test finds application across diverse legal domains such as negligence, contractual agreements, and criminal proceedings. The idea is to ascertain whether an individual’s behaviour aligns with expected norms of care and conduct.

Fundamentally, the Reasonable Person Test seeks to determine whether the individual’s actions mirror those of a reasonably cautious person under the same circumstances.

However, since there’s no specific definition of “reasonable,” lawyers and courts can have a field day arguing over adverb-verb-gibberish

Conduct Unconscionable, Reasonable Person Test

In Australia, the “reasonable person test” is applied in the context of conduct unconscionable primarily under the Australian Consumer Law (ACL), which is part of the Competition and Consumer Act 2010.

Within the scope of the Corporations Act, the concept of the “reasonable person test” holds significance in assessing conduct unconscionable from the perspective of the average individual.

This evaluation gauges whether an individual’s actions would be deemed reasonable by an ordinary person facing analogous circumstances.

Its application extends to delineating various legal obligations and responsibilities, notably in the realm of directors’ duties and corporate law.

When assessing whether conduct is unconscionable under the ACL, the courts often consider the following situation:

Would a reasonable person:
1. with the same knowledge and
2. in the same circumstances as the parties involved,
would consider the conduct to be unconscionable.

This involves examining various factors. There’s the relative bargaining power of the parties. Is there any special vulnerability of one party? What’s the conduct of the stronger party? And what are the terms of the transaction?

Take the case of a business using unfair tactics to take advantage of a vulnerable consumer. For example, the business is exploiting their lack of understanding or bargaining power. In this situation the courts may find that the conduct is unconscionable.

The test involves asking whether a reasonable person, placed in the same position as the consumer, would view the behaviour as unacceptable.

Decisions By Courts

Here are some court cases in Australia where judges rule in favour of the damaged party due to unconscionable conduct:

1. ASIC v Kobelt (2005)
In this case, the Federal Court finds that Mr. Kobelt, a financial planner, is engaging in unconscionable conduct. He’s advising clients to invest in high-risk schemes without adequately disclosing the risks involved.

The court rules in favour of the Australian Securities and Investments Commission (ASIC), the regulator, and orders Mr. Kobelt to pay compensation to the affected clients.

2. ACCC v Lux Distributors Pty Ltd (2006)
Here the Australian Competition and Consumer Commission (ACCC) took legal action against Lux Distributors. The ACCC accused this door-to-door sales company of engaging in unconscionable conduct.

The Federal Court finds that Lux Distributors use unfair and deceptive tactics to sell vacuum cleaners to elderly consumers. The court rules in favour of ACCC and imposes penalties on Lux Distributors.

3. ACCC v Apple Pty Ltd (2013)
ACCC takes legal action against Apple Pty Ltd, the Australian subsidiary of Apple Inc., for misleading consumers about their rights regarding faulty products.

The Federal Court finds that Apple engages in unconscionable conduct by misleading consumers about their rights to repair or replace faulty iPhones and iPads. The court rules in favour of the ACCC and imposes penalties on Apple Pty Ltd.

These cases demonstrate Australian courts intervening to protect consumers and other parties from unfair and unethical conduct.