Norton Rose partner Stephen Giles drafted the submission on
behalf of the Franchise Council of Australia and will be
representing the FCA in discussions with the Government and the
Expert Committee. The FCA examined the merits of the proposal and
concluded that the inclusion of a list of examples would not
enhance the understanding or application of the law. Indeed it was
likely to lead to greater uncertainty, and possibly even a
narrowing of the interpretation of unconscionable conduct.
Interestingly, although seemingly innocuous, the suggestion to add
examples or principles would in fact have reversed the onus of
proof in any situation which came within an example. Further, some
of the suggested examples would clearly only be unconscionable in
very limited circumstances, and in other circumstances could well
be quite legitimate business practises.
Advocates for change have endeavoured to alter the regulatory
framework in several ways over the past few years. There have been
attempts to more radically change the Franchising Code of Conduct,
to introduce a new statutory duty of good faith, to redefine
unconscionable conduct such that it in fact prohibits conduct that
is unfair, to introduce State based franchise legislation and now
to introduce "examples or principles" of unconscionable
conduct. If no action is taken in this instance there is quite
likely to be more action at a State level.
The Expert Committee is likely to wish to provide some examples
to Government, but the devil will be in the detail. As
unconscionable conduct needs to be considered in the context of all
relevant circumstances, it is hard to isolate an individual action
as an example of conduct that will typically be unconscionable. A
better way is to allow the courts and the ACCC to continue to
produce complete examples that are in the context of all relevant
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We discuss whether certain clauses commonly found in ordinary commercial contracts could be considered to be penalties.
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