Unconscionable Conduct



  • Unconscionable conduct deals with transactions between a dominant and a weaker party.
  • Unconscionable conduct is prohibited by equity and by statue.
  • It is crucial to understand the effect of any legally binding document prior to signing it.

What is unconscionable conduct?

Unconscionable conduct relates to conduct, which is unfair or oppressive and within the meaning of the unwritten law from time to time. Unconscionable conduct relates to transactions between parties where there is a difference in bargaining power. Unconscionable conduct is prohibited by both, Common Law through Equity and by Statue with an example being, the Australian Consumer Law (“ACL”).[1]


Equity will intervene in instances where conduct is said to be unconscionable due to an unfair dispute arising between a dominant party, who has taken advantage of a weaker party’s “special disability”. A person might be considered to have a “special disability” because of their age, infirmity, education, background, language limitations, or drunk in instances where a Contract is involved.

A good example of equity intervening is the case of Commonwealth Bank v Amadio[2]. In this case, the bank manager attended the premises of the parents to obtain their signatures on a mortgage, as personal guarantees for their sons’ business. No explanation was given to them in relation to the document. Commonwealth Bank subsequently demanded payment on the personal guarantee and sought to exercise power of sale under the mortgage.

At the time of the documents being signed Commonwealth Bank were aware of the couple’s language limitations and their age and ultimately, took advantage of their “special disability”. The Court held that the bank had engaged in unconscionable conduct and that the guarantee was invalid and could not be relied on.


Additionally, conduct that would be deemed unconscionable is expressly prohibited by Statue with examples being the ACL. The ACL expressly prohibits conduct that is unconscionable in trade or commerce.

The ACL is established under Schedule 2 of the Competition and Consumer Act 2010 (Cth). Under section 20 of the ACL[3], it provides that “a person must not, in trade or commerce, engage in conduct that is unconscionable, within the meaning of the unwritten law from time to time”. Section 22[4] of the ACL provides the factors that the Court may consider when determining whether the conduct amounts to unconscionable. The factors that the Courts may consider, includes but is not limited to:

  • Relative strengths of the bargaining positions of the supplier and the customer; and
  • Whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the customer or person acting on behalf of the customer by the supplier; and
  • The extent to which the supplier and the customer acted in good faith.

Prior to signing any legally binding documents, it is important that you comprehend the legal effect of these documents. If you are unsure about the contents of document or the terms contained within, it is always prudent to have it reviewed by a Lawyer.

If you have any questions in relation to unconscionable conduct or seek assistance, please do not hesitate to contact the team at Miller Sockhill Lawyers.



[1] Competition and Consumer Act 2010 (Cth), schedule 2, Australian Consumer Law.

[2] Commonwealth Bank v Amadio (1983) CLR 447.

[3] Competition and Consumer Act 2010 (Cth), schedule 2, Australian Consumer Law, s20.

[4] Competition and Consumer Act 2010 (Cth), schedule 2, Australian Consumer Law, s22.