Business Law Assignment: Contract, Unconscionable Conduct, and Cases

This case study examines a business law scenario involving a contract dispute between Rofi, a refugee with limited English proficiency, and The Bolton Connect Pty Ltd. The core issues revolve around the validity of the contract and whether John, the agent of Bolton Connect, engaged in unconscionable conduct. The analysis delves into relevant legal principles, including the Australian Consumer Law (ACL) and the common law concerning unconscionable conduct, referencing key cases like Louth v Diprose, Blomley v Ryan, and Commercial Bank of Australia v Amadio. The application section considers Rofi's circumstances, John's awareness of Rofi's language barrier, and the agent's failure to use available translation tools. The study concludes that John's actions constituted unconscionable conduct, entitling Rofi to rescind the contract without penalty. The study provides a comprehensive analysis of the legal principles and their application to the given facts, making it a valuable resource for students studying business law.

Running Head: BUSINESS LAW
Business law
Name of the student:
Name of the University:
Author Note

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Issue:
 Was a valid contract formed between Rofi and The Bolton Connect Pty Ltd?
 Was there unconscionable conduct on the part of John, agent of The Bolton Connect Pty
Ltd.?
Rule:
It is to be stated that the conduct or action of a party to a contract will be held to be
unconscionable if such conduct defies good conduct and is considered unreasonable. The
provision of unconscionable conduct however, is ambiguous as there are no clear definitions of it
provided by the law (Knapp, Crystal and Prince 2016).
It is to be mentioned that the clause of unconscionable conduct is governed by the
common law of Australia. Schedule 2 of the Australian Competition and Consumer Act 2010
also governs the provision of unconscionable conduct.
Section-21 of the Australian Consumer Law states that a contract should be signed by a
consumer, only if he completely understands the terms of such contract. However, such principle
holds true for written contracts. A person dealing with the acquisition and supply of goods will
be regarded to have conducted in an unconscionable manner if he fails to act in good faith or
impose any unreasonable terms on the weaker party. Unconscionable conduct will also be said to
have been exhibited by the stronger party if he uses undue influence on the weaker party to enter
into such contract.

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Subsection 21(3) mentions that the court will consider the circumstances which are
reasonably foreseeable to a reasonable man in determining whether the subsection of the
aforementioned act has been breached.
It can be stated according to subsection 4c that the court will assess the terms of the
contract and the execution of duties of the parties in determining whether any unconscionable
conduct was exhibited by either of the parties. In addition it can be said that the court might also
assess the circumstances of the parties at the time when the contract was formed.
Intervention of equity is essential and inevitable in certain circumstances according to
common law to protect the interests of the weaker party to a contract. However equity intervenes
in circumstance where one of the parties takes advantage of disability of the weaker party. If it is
established that one of the parties intended to form the contract on harsh terms which were likely
to create oppressive results for the weaker party, such party has the right to rescind the contract.
The case, Louth v Diprose High Court of Australia (1992) 175 CLR 621; [1992] HCA
61 deals with the clause of unconscionable conduct. In this case the defendant had emotionally
blackmailed the plaintiff to buy a house for her. The defendant had taken advantage of the
plaintiff’s feelings for her. However, after their relationship failed and the two fell out the
plaintiff started legal proceedings against the defendant and claimed the house back. The court
held that the plaintiff had every right to claim the house back. The action of the defendant was
held to be unconscionable as she had emotionally blackmailed him to buy the house and such
conduct created ‘an atmosphere of crisis’ and was not necessary to be exhibited in reality.
Another important case dealing with the same provision is Blomley v Ryan (1956) 99
CLR 362. In this case the defendant had agreed to buy from the plaintiff a farm. The plaintiff

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regularly used to be intoxicated due to alcohol intake and was 78 years of age. The court held
that plaintiff did not have the capacity to make a rationale judgment about the decision to sell the
plot of land as he was under the influence of alcohol. The consideration amount was also well
below the market price.
Commercial Bank of Australia v Amadio (1983) 151 CLR 447; [1983] HCA 14 in this
remarkable case addressed an important issue in relation to unconscionable conduct exhibited by
a party. The defendant had induced the plaintiffs to act as guarantors of a loan taken by the
defendant. The parents of the defendant were Italians and therefore had very little understanding
of the English language. It was held by the court that the defendants had the right to rescind the
contract as the defendant’s conduct was considered to defy good conduct and therefore
intervention of equity was necessary.
Kakavas v Crown Melbourne Ltd [2013] HCA 25 is a relatively recent case dealing with
the same provision. The High court of Australia interpreted section 51 AA OF THE Trade
Practices Act 1947 and applied the same in the aforementioned case. However, the
aforementioned section was repealed and replace by the section 20 of the Australian competition
and consumer act 2010. In this case the plaintiff had an interest in gambling. The court held that
the habit of gambling did not constitute a special disability or disadvantage and therefore the
question of unconscionable conduct did not arise.
Application
In this chosen case study Rofi is a refugee from Burma who has arrived in Australia. He
does not have proper understanding of the English language. Rofi had entered into a contract
with the agent of Bolton Connect Pty Ltd, John. It is to be mentioned that John had been aware

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of the fact that Rofi does not good command or understanding of the English language. He had
induced him to enter into the contract. Therefore in this circumstance the court will analyze and
assess the circumstance of Rofi at the time of entering into the contract. The court will assess the
way the terms of the contract were carried out. Although it was mentioned to him, that if he
decides to rescind the contract he would be liable to pay a penalty of 1200 dollars, it cannot be
expected that he had completely understood the aforementioned clause as he did not have proper
understanding of the English language and lacked technical knowledge. Further it is to be stated
that the agent John had access to translator devices which he did not use while explaining the
terms of the contract Rofi as he was in a hurry to meet his targets.
Therefore, after discussing and analyzing the facts of the case, it can be stated that John
had exhibited unconscionable conduct when he attempted to induce Rofi into entering the
contract. The court can apply the provision as stated in section 21(4) of the Australian Consumer
Law in order to establish unconscionable conduct. The aforementioned provision states that court
must consider the circumstances of the parties at the time of contract formation. It can further be
established by the findings and the decisions of the courts in the cases discussed above that Rofi
has the right to rescid the contract as he did not understand the hidden penalty charge of the
contract. Rofi in this situation was exposed to a detrimental position by John who had tried to
take advantage of his disability.
Conclusion
Thus, in conclusion it can be said that a contract had formed between Bolton Connect Pty
Ltd. and Rofi. However such contract was entered in to by Rofi due the unconscionable conduct

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of John and therefore Rofi has the right to rescind the contract without paying any penalty
charge.

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References
Australian Competition and Consumer Act 2010
Blomley v Ryan (1956) 99 CLR 362
Commercial Bank of Australia v Amadio (1983) 151 CLR 447; [1983] HCA 14
Kakavas v Crown Melbourne Ltd [2013] HCA 25
Knapp, C. L., Crystal, N. M., & Prince, H. G. (2016). Problems in Contract Law: cases and
materials. Wolters Kluwer Law & Business.
Louth v Diprose High Court of Australia (1992) 175 CLR 621; [1992] HCA 61