Unconscionable Contract Analysis

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Section 21 of the Australian consumer law states that in trade or commerce in connection with the supply or possible supply of goods or services of any kind to a person other then a listed public company, a person must not engage in it that is unconscionable and deceptive under all circumstances (Gerard Brody, 2010).

This proceeding concerns the circumstances surrounding an installation of a swimming pool. Unfortunately, Dan and Meg sign the contract without prior legal advice to read it through again and check on the exclusion clause and other clauses that are unrelated to the contract.

According to the Australian Consumer Law, the legal issue in the case of Dan and Meg vs. Pool and Tools PTY LTD is unconscionable, deceptive and misleading conduct (Gerard Brody, 2010). This is a result of unwilling of the sale representative, an employee of Pool and Tool PTY LTD, to offer explanation to the plaintiffs before the contract was signed.

The law under section 21 uses a special disadvantage principle over Dan and Meg due to their lack of knowledge of the matters at issue as the sale representative did not offer explanation concerning the terms of the contract. The plaintiffs signed a contract they did not fully understand which included clauses that were totally unrelated to the issue. This kind of action by the PTY Company is misleading and deceptive as well as unconscionable for the part of the plaintiffs.

The plaintiffs who were installed a swimming pool in the backyard were advised to sign a contract by the sales representative prior to the construction. The contract contained clauses that were completely unassociated with the contract. Meg and Dan entered into a contact by signing on the document to ascertain that they had agreed to all the terms of the contract though they lacked for knowledge of what they were legally entering.

After the contract had been completed and the pool had installed, it sprung a leak within a few months due to negligence on the part of the contractor’s inactions. The issue is whether the plaintiffs will part with their money for the repairs as a result of the respondents’ deceptive conducts.

The initial conduct of the sales representative in regards to the terms of the contract is misleading and deceptive in nature. The Australian consumer law clearly stipulates that an individual or an agency in commerce and practice must not involve in conduct that is misleading. The sales representative of Pool and Tool PTY LTD’s failure to reveal crucial information as well as deliberately misleading the plaintiffs to agree to the clauses not related to the contract and thus deceptive with commercial interests. ¹

So to speak, a legally binding contract has been formed between Dan and Meg and Pool and Tool PTY LTD. This is because the plaintiffs decided to sign the contract which keeps them bound to follow the set requirements under the contract. The plaintiffs should have sought for a legal piece of advice before signing the contact, but due to the neglect, offered by the sales representative, to ask for an attorney’s help, they decided to be legally bound by signing.

However, when established by the courts that actually the sales representative of the Pool and Tool PTY LTD Company in trade and practice offered misleading information during contract negotiations, the contract may be rescinded by the courts and the plaintiffs awarded damages by compelling the Pools and Tools PTY LTD to repair the pool at its own expense.

In the case of Henjo investments Pty Limited V. Collins Marwickville Pty Limited, the buyer, Collins Marrickville, effects the written contract that signified that the whole agreement between the parties did not wholly depend on any representation made by the Henjo investments Pty Limited agents. Afterwards, the facts were established and the buyer filed a suit under Trade practice Act in quest for a bid that the contract would be rescinded and made an order for damage. The hearing Judge Wilcox judged in support of Collins Marrickville and made an order for damages.

In the case of Meg and Dan vs. Pool and Tool PTY LTD, when the legally binding contract is deceptive in nature because of the clauses that are unrelated to the contract, the contract is bound to be rescinded by the courts when the cause of the damage is found to be as a result of the misleading statement. (Australia Competition & Consumer Commission, 2010)

The arguments of the plaintiff are that Dan and Meg requested for the services of Pool and Tool PTY LTD for the installation of a pool. However, prior to the installation, the sales representative of the company willingly requested them to sign a contract as a policy of the company as soon as possible, without the plaintiffs prior knowledge of the terms of the contract, and its nature which was misleading in fact because of the clauses that were included with commercial motives. However, in case the defendants are not relevant, all that is important is whether the conduct of the defendants was misleading or deceptive as it was in the case of the sale representative, or even likely to mislead Hornsby building information centre Pty vs. Sydney Building centre limited.

Some of the clauses stipulated that when a foreign object is responsible for the damage of the pool, the company was not liable for the damages anyway. However, due to the negligence of the company during installation, a few months later, the pool began leaking. Liability is on the part of Pool and Tool PTY LTD because the company had state in their contract that in exclusion of a foreign object, any damage in the pool would rest on them. Due to their deceptive conduct in business with Dan and Meg through their sales representative, they are bounded to place their clients on the prior position. In other words, the company is obliged to repair the pool at its own expense.²

The arguments of the defendants are that there is a legally binding contract between Dan, Meg and Pool and Tool PTY LTD, and the sales representative legally invited the plaintiffs to read through the contact but negligently opted to sign it because the contract had a lot of pages.

The defendants can argue that Dan and Meg signing the contract without asking for a legal piece of advise was doing a negligent act on the part of the plaintiff, and that the company is not liable to any damages that are to be incurred.

The arguments of Meg and Dan are weighty because the contract offered by Pool and Tool PTY LTD was misleading in nature and they unconscionably agreed to its terms without been advised to read it through by the sales representative. The sales representatives in business mislead the plaintiffs by inserting clauses that were not related to the contract.

The likely outcome of this case will be in favor of Meg and Dan because the court will establish that some of the clauses that were inserted in the contract are unrelated to the contract, thereby establishing a misleading motive of the company. The court will order the contract to be rescinded and award damages for the plaintiffs.³

References

Australia Competition & Consumer Commission, Misleading and deceptive conduct (2010). Web.

Brenda Marshall, “Liability for Unconscionable and Misleading Conduct in Commercial Dealings: Balancing Commercial Morality and Individual Responsibility” (1995) Bond Law Review 7, 2, 3. Web.

Gerard Brody, The Australian Consumer Law (2010). Web.

Glenda M Crossling, and Helen M Murphy, How to Study Business Law (LexisNexis Butterworths, 1999).

John Goldring, Consumer Protection Law (The Federation Press, 2007).

Julie Clarke, Australian Contract Law: Unconscionable conduct (2011). Web.

Lancelot John Priestley, Unconscionability as a restriction on the exercise of contractual rights (Australian Press, 1986).

Footnotes

Keywords: Australia consumer law, disclosure, trade practices, deceptive or misleading conduct, unconscionable conduct, negligent advice, estoppel contract.
The arguments of the defendants are that there is a legally binding contract because of negligence on the part of Dan and Meg. Invitation to treat, legally bound and exclusion clauses.
Possible outcome would be in favor of Dan and Meg because of deception and misleading clauses on the part of Pty Company.

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Unconscionable Contract Analysis

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