Analyzing Vladimir's Case: Unconscionable Conduct in Contract Law

This case study analyzes a situation where Vladimir, a recent migrant with limited English proficiency, unknowingly signed a contract transferring his money to a land broker. The analysis focuses on whether the contract is unconscionable under common law and the Australian Consumer Law (ACL). It ...Read More

Issue: In this case, the issue that needs to be decided is related with the enforceability of
unconscionable contract.
Rule: In terms of contract law, unconscionable conduct has been prohibited by the common law
and also by statute in the form of Australian Consumer Law (ACL) (Sharpe and Parker, 2006). In
this context, unconscionable conduct is related with the transactions that take place between a
dominant and weaker party ((Paterson and Brody, 2014).
Unconscionable conduct in equity: equity intervenes in cases where, on account of the presence
of 'special disability', the other party has taken an advantage. It is generally required that the
transition should be harsh and oppressive for the weaker party (Blomley v Ryan, 1954). Where
these facts are established, the law provides a choice to avoid such transaction (Commercial
Bank v Amadio, 1983).
Unconscionable conduct under statute: the Australian Consumer Law was a prohibition on
unconscionable conduct in Part 2-2. Therefore, section 21, ACL provides that in context of trade
or commerce, a person should not be involved in unconscionable conduct, falling under the
meaning provided by unwritten law (Kakavas v Crown Melbourne Ltd., 2013).
Application: in the present case, Vladimir was had recently migrated from Russia. He had very
little knowledge of English language. Therefore during the negotiations for purchasing a house,
he was asked to sign a document. Hit was told that the document was a loan document. The
reality was that the document transferred Vladimir's money to the land broker. Under these
circumstances it is clear that the contract created between the parties was unconscionable.
Therefore the law provides that in such a case the weaker party has the option of avoiding the

contract. Therefore in the present case Vladimir can rescind the contract created with the land
broker.
Conclusion: Vladimir is allowed by the law to rescind this contract.

References
Paterson, J. and Brody, G. (2014). “Safety Net” Consumer Protection: Using Prohibitions on
Unfair and Unconscionable Conduct to Respond to Predatory Business Models. Journal of
Consumer Policy, 38(3), pp.331-355
Sharpe, M. and Parker, C. (2006). The ACCC Compliance and Enforcement Project: Assessment
of the Impact of ACCC Regulatory Enforcement Action in Unconscionable Conduct Cases.
SSRN Electronic Journal
Case Law
Blomley v Ryan (1954) 99 CLR 362
Commercial Bank of Australia v Amadio (1983) 151 CLR 447
Kakavas v Crown Melbourne Ltd [2013] HCA 25