DOCSLIB.ORG

Strengthening Statutory Unconscionable Conduct and the Franchising Code of Conduct

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Strengthening Statutory Unconscionable Conduct and the Franchising Code of Conduct Strengthening statutory unconscionable conduct and the Franchising Code of Conduct February 2010 Strengthening statutory unconscionable conduct and the Franchising Code of Conduct Report to the Hon Dr Craig Emerson MP Minister for Small Business, Independent Contractors and the Service Economy Minister for Competition Policy and Consumer Affairs February 2010 © Commonwealth of Australia 2010 ISBN 978-0-642-74587-3 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and enquiries concerning reproduction and rights should be addressed to the: Commonwealth Copyright Administration Attorney-General’s Department 3-5 National Circuit BARTON ACT 2600 Or posted at: http://www.ag.gov.au/cca LETTER TO THE MINISTER The Hon Dr Craig Emerson MP Minister for Small Business, Independent Contractors and the Service Economy Minister for Competition Policy and Consumer Affairs Parliament House CANBERRA ACT 2600 Dear Minister In response to the terms of reference provided to us on 26 November 2009, we are pleased to enclose our final report, Strengthening statutory unconscionable conduct and the Franchising Code of Conduct. Yours sincerely Professor Bryan Horrigan Mr David Lieberman Mr Ray Steinwall February 2010 iii TABLE OF CONTENTS LETTER TO THE MINISTER ......................................................................................................... III GLOSSARY .............................................................................................................................. VII FINDINGS.................................................................................................................................. IX Unconscionable conduct ...............................................................................................................ix Franchising Code of Conduct........................................................................................................xi Other matters .............................................................................................................................. xiii 1 REGULATING BUSINESS CONDUCT.....................................................................................1 Laws governing business conduct in Australia ..............................................................................2 Unconscionable conduct ................................................................................................................4 Franchising Code of Conduct.......................................................................................................12 Context of this report....................................................................................................................14 2 UNCONSCIONABLE CONDUCT PROPOSALS.......................................................................17 Proposals for reform.....................................................................................................................18 The problem .................................................................................................................................19 A list of examples .........................................................................................................................22 A statement of principles..............................................................................................................29 Other options................................................................................................................................34 3 FIVE FRANCHISING BEHAVIOURS .....................................................................................43 Franchising behaviours ................................................................................................................43 I Unilateral contract variation..................................................................................................46 II Unforeseen capital expenditure............................................................................................53 III Franchisor-initiated changes to franchise agreements when a franchisee is trying to sell the business...............................................................................................................61 IV Attribution of legal costs .......................................................................................................66 V Confidentiality agreements...................................................................................................71 Further measures.........................................................................................................................78 4 OTHER MATTERS ............................................................................................................83 Link between unconscionable conduct and franchising...............................................................83 Good faith.....................................................................................................................................84 Dispute resolution.........................................................................................................................85 Research and advocacy...............................................................................................................87 Conclusion....................................................................................................................................89 REFERENCES...........................................................................................................................91 APPENDIX A CONSULTATION PROCESS ............................................................................... A-1 APPENDIX B RELEVANT CASE LAW ON UNCONSCIONABLE CONDUCT .................................... B-1 APPENDIX C ACCC ENFORCEMENT OF UNCONSCIONABLE CONDUCT ................................... C-1 APPENDIX D PREVIOUS REVIEWS CONCERNING UNCONSCIONABLE CONDUCT AND FRANCHISING REGULATION.............................................................................. D-1 v GLOSSARY ACCC Australian Competition and Consumer Commission ACL Australian Consumer Law ASIC Australian Securities and Investments Commission ASIC Act Australian Securities and Investments Commission Act 2001 COAG Council of Australian Governments Franchising Code Franchising Code of Conduct (schedule to the Trade Practices (Industry Codes--Franchising) Regulations 1998) Issues paper The nature and application of unconscionable conduct regulation: Can statutory unconscionable conduct be further clarified in practice, released by Treasury on 27 November 2009 Joint Committee Parliamentary Joint Committee on Corporations and Financial Services PC Productivity Commission TPA Trade Practices Act 1974 vii FINDINGS UNCONSCIONABLE CONDUCT Findings 2.1 In many circumstances, statutory unconscionable conduct can be difficult for stakeholders to understand and for the courts to apply, which contributes to a lack of certainty and confidence surrounding the effect of the provisions. 2.2 A list of examples will not improve understanding or implementation of the provisions. 2.3 Interpretative principles, as an aid to interpretation of the provisions, would assist the courts in interpreting the provisions, stakeholders in understanding them and regulators in enforcing them. 2.4 The principles should recognise that section 51AC (and, arguably, section 51AB) of the TPA and equivalent provisions of the ASIC Act are intended to go beyond the scope of the equitable and common law doctrines of unconscionability, and are not confined by them. 2.5 The following principles may also be distilled from relevant case law and the policy intention of previous and current governments: • the court may consider the terms and progress of a contract; • the provisions may apply to systems of conduct or patterns of behaviour; and • the identification of a special disadvantage is not necessary to attract the application of the provisions. 2.6 Given there will be a single national law with respect to statutory unconscionable conduct under the Australian Consumer Law, with penalties and increased enforcement powers for regulators, it is timely for the ACCC, ASIC and state and territory regulators to develop uniform national guidance on the provisions, along similar lines to the guidance being prepared for the new unfair terms regime. 2.7 Regulators should pursue further test cases to inform their guidance material, over time. These test cases should draw on conduct in diverse industries, and should be used to assist in the understanding of the interpretative principles recommended by the panel. ix Unconscionable conduct — Findings (continued) 2.8 As part of the process for introducing statutory unconscionable conduct into the Australian Consumer Law, the Government should consider harmonising or unifying sections 51AB and 51AC. 2.9 The efficacy of the changes to statutory unconscionable conduct currently being introduced, and of any changes introduced as a result of this report, should be assessed after three to five years. This assessment will be assisted by improved mechanisms for empirical and other research, as discussed in Chapter 4. x FRANCHISING CODE OF CONDUCT Findings 3.1 Legitimate commercial reasons exist for the unilateral variation of franchise agreements, particularly (but not solely) through amendments to the operations
Load more

Recommended publications
  • A CASE STUDY of LOUTH V DIPROSE*
    STORYTELLING AND THE LAW: A CASE STUDY OF LOUTH v DIPROSE* By Lisa Sarmas^ [Legal storytelling is a relatively new addition to critical legal scholarship. This article draws on its insights and methodology, exploring the stories told and untold in legal discourse, with specific reference to the case of Louth v Diprose. The author links both the outcome of the case and the doctrinal development which it signalled, to the narratives deployed by the majority judges. It is contended that these narratives, as well as those of the judges in dissent, reflect and reinforce domi­ nant ideas about gender and social class. The article concludes with a consideration of the strategies which might be employed by those who seek to include previously silenced voices in legal discourse.] Introduction [I]n some respect this is but one more case in the annals of human relationships in which an infatuated but unrequited suitor has lavished gifts upon the subject of his infatuation, well knowing what he was doing and intending to do it, but in a sense allowing his heart to rule his head. Jacobs ACJ1 To make sense of law and to organize experience, people often tell stories. And these stories are telling. Kim Lane Scheppele2 Legal storytelling poses a radical challenge to established ways of thinking and writing about the law. In recent years it has emerged as a powerful force in the legal academy.3 My aim in this article is to engage its insights in an exam­ * Diprose v Louth (No 1) (1990) 54 SASR 438 (King CJ); Diprose v Louth (No 2) (1990) 54 SASR 450 (Full Court); Louth v Diprose (1992) 175 CLR 621 (High Court).
    [Show full text]
  • CLR2021-Vol18 2.Pdf
    Canberra Law Review (2021) 18(1) ii Canberra Law Review The Canberra Law Review is a peer-reviewed law journal published each year by the Canberra Law School at the University of Canberra. It brings together academics, other scholars, legal practitioners, and students within and outside the University. It provides a peer-reviewed open access venue for innovative, cross- disciplinary and creative scholarly articles and commentaries on law and justice. Submissions The editors of the Canberra Law Review seek submissions on aspects of law. We welcome articles relating to theory and practice, and traditional, innovative and cross- disciplinary approaches to law, justice, policy and society. Guidelines • Scholarly articles should be 5,000-14,000 words, case notes 1,500-3,000 words and book reviews 1,000-1,500 words (including references). • Submissions must conform to the 4th edition of the Australian Guide to Legal Citation (AGLC4) and be 12 pt Times New Roman, single-spaced. • Scholarly articles must be accompanied by an abstract of no more than 250 words. • Submissions must not have been previously published in another journal. Submissions should be emailed as MS Office .docx or .doc documents to [email protected]. Peer-Review Scholarly articles are blind peer-reviewed by reviewers. Open Access Consistent with the Canberra Law School’s emphasis on inclusiveness, the Review is open access: an electronic version is available on the University of Canberra website and on the Australasian Legal Information Institute (AustLII) website. ISSN ISSN 1839-2660 (Online) The ISSN for pre-digital (ie print) issues of CLR is 1320-6702.
    [Show full text]
  • Download Decision
    5KIPGFD[#WUV.++ HIGH COURT OF AUSTRALIA KIEFEL CJ, BELL, GAGELER, KEANE, NETTLE, GORDON AND EDELMAN JJ THORNE APPELLANT AND KENNEDY RESPONDENT Thorne v Kennedy [2017] HCA 49 8 November 2017 B14/2017 ORDER 1. Appeal allowed. 2. Set aside the orders of the Full Court of the Family Court of Australia made on 26 September 2016 and, in their place, order that the appeal to that Court be dismissed with costs. 3. The respondent pay the appellant's costs of the appeal to this Court. On appeal from the Family Court of Australia Representation M J Foley with P J Woods for the appellant (instructed by Somerville Laundry Lomax) R G Lethbridge SC with G C Eldershaw and D Birch for the respondent (instructed by Jones Mitchell Lawyers) Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports. 4GVTKGXGFHTQO#WUV.++QP0QXGODGTCV 8GTKH[XGTUKQP 5KIPGFD[#WUV.++ 4GVTKGXGFHTQO#WUV.++QP0QXGODGTCV 8GTKH[XGTUKQP 5KIPGFD[#WUV.++ CATCHWORDS Thorne v Kennedy Family law – Financial agreements – Family Law Act 1975 (Cth), Pt VIIIA – Pre-nuptial agreement – Post-nuptial agreement – Where fiancé wealthy – Where fiancée had no substantial assets – Where fiancée moved to Australia for purposes of marriage – Where fiancée had no community or connections in Australia – Where fiancée relied on fiancé for all things – Where pre-nuptial agreement provided to fiancée shortly before wedding – Where fiancé told fiancée that if she did not sign agreement wedding would not go ahead – Where independent solicitor advised fiancée against signing – Where pre-nuptial agreement signed – Where substantially identical post-nuptial agreement signed – Whether agreements voidable for duress, undue influence, or unconscionable conduct – Whether primary judge's reasons adequate.
    [Show full text]
  • Australian Competition and Consumer Commission V C G Berbatis Holdings Pty Ltd*
    —M.U.L.R- Bigwood - final proof.doc — Curbing Unconscionability: Berbatis in the High Court of Australia — printed 19/05/04 at 20:55 — page 203 of 29 CASE NOTE AUSTRALIAN COMPETITION AND CONSUMER COMMISSION V C G BERBATIS HOLDINGS PTY LTD* CURBING UNCONSCIONABILITY: BERBATIS IN THE HIGH COURT OF AUSTRALIA RICK BIGWOOD† [This case note critically analyses the High Court’s recent decision in Berbatis. The majority in Berbatis took a restrictive approach in applying s 51AA of the Trade Practices Act to the facts of the particular case. In contrast, the single dissenting judge took a more expansive view of the merits of the appeal. This case note criticises the majority judges’ rather perfunctory handling of the facts of the case — a matter made worse by their Honours’ failure to link the elements of unconscionable dealing to a sophisticated conceptual account of interpersonal exploitation in market exchange contexts. The case note explains how the minority judge’s reasoning might have been reinforced by reference to the developing jurisprudence on so-called ‘lawful act’ duress, especially as found in the United States.] CONTENTS I Introduction.............................................................................................................204 II The Facts, Litigation and Decision .........................................................................205 A The Facts.....................................................................................................205 B The Litigation.............................................................................................206
    [Show full text]
  • The Extent to Which Unconscionability at General Law, the Special Equity In
    THE EXTENT TO WHICH UNCONSCIONABILITY AT GENERAL LAW, THE SPECIAL EQUITY IN GARCIA AND PART IVA OF THE TRADE PRACTICES ACT 1974 (CTH) ARE AVAILABLE TO A DEBTOR OR GUARANTOR WHEN A FINANCE PROVIDER SEEKS TO ENFORCE A SECURITY by Geoffrey Nigel O’Shea A thesis submitted for the degree of Doctor of Juridical Science University of Technology, Sydney 28 May 2010 CERTIFICATE OF AUTHORSHIP/ORIGINALITY I certify that the work in this thesis has not previously been submitted for a degree nor has it been submitted as part of requirements for a degree except as fully acknowledged within the text. I also certify that the thesis has been written by me. Any help that I have received in my research work and the preparation of the thesis itself has been acknowledged. In addition, I certify that all information sources and literature used are indicated in the thesis. Geoffrey Nigel O’Shea 1 ACKNOWLEDGEMENTS I thank my Thesis Master, Geoffrey Moore, for his insights, enthusiasm and assistance provided, without which this thesis could not have been finished. I also recognise the excellent support provided by the Law Faculty Administrative Staff throughout the past eight years. Lastly, I acknowledge the enduring support of my wife and family which saw this task through to completion. 2 TABLE OF CONTENTS CERTIFICATE OF AUTHORSHIP/ORIGINALITY................................................ 1 ACKNOWLEDGEMENTS ........................................................................................... 2 TABLE OF CONTENTS ..............................................................................................
    [Show full text]
  • Private Law in Theory and Practice
    Private Law in Theory and Practice Private Law in Theory and Practice explores important theoretical issues in tort law, the law of contract and the law of unjust enrichment, and relates the theory to judicial decision making in these areas of private law. Topics covered include the politics and philosophy of tort law reform, the role of good faith in contract law, comparative perspectives on setting aside con- tracts for mistake, and the theory and practice of proprietary remedies in the law of unjust enrichment. Contributors to the book bring a variety of theoretical perspectives to bear on the analysis of private law. They include: economic analysis, corrective justice theory, comparative analysis of law, socio-legal inquiry, social history, political theory as well as doctrinal analysis of the law. In all cases the theor- etical approaches are applied to recent case law developments in England, Australia and Canada, and, in the case of tort law, proposals in all these jurisdictions to reform the law. The book aims to present the theory of private law, and the application of theory to practical legal problems in an accessible form to teachers and students of tort, contract and the law of unjust enrichment, legal researchers and law reformers. Michael Bryan is Professor of Law at the University of Melbourne. He has researched and published extensively in the areas of equity, trusts and restitu- tion, including The Law of Non-Disclosure (with A. Duggan and F. Hanks: Longman, 1995) and contributed a chapter to The Law of Obligations: Connections and Boundaries (UCL Press, 2003).
    [Show full text]
  • The Equitable Doctrine of Unconscionable Dealing and the Elderly in Australia
    THE EQUITABLE DOCTRINE OF UNCONSCIONABLE DEALING AND THE ELDERLY IN AUSTRALIA FlONA R BURNS* As the overall population ages, it will be necessary to reappraise the effectiveness of legal doctrines and legislation from the perspective of fhe elderly claimant. The purpose of this article is to evaluate the current operation of the equitable doctrine of unconscionable dealing by a review of recent cases involving elders decided in the High Court, the Federal Court and, in particulal; the State Supreme Courts. It will be argued that despite the attempts of the High Court to read the criteria for unconscionable dealing broadly, lower courts have tended overall to interpret and apply the criteria strictly. Therefore, there has been an ongoing tension between laissez-faire attitudes and equity's role to protect vulnerable persons with the result that it is questionable whether the doctrine has been used consistently and adequately to protect elders who suffer from a special disadvantage. I INTRODUCTION In Australia,' as in other Western co~ntries,~there is strong evidence that the population is living longer, with the result that the overall population is ageing. One consequence of this demographic trend has been the realisation that aspects * Senior Lecturer, Faculty of Law, University of Sydney. I would like to thank Professor Patrick Parkinson and the anonymous referee for their comments on earlier drafts of this article. My thanks also to Mr Yane Svetiev and MS Myra Chen for some research assistance provided under the University of Sydney Sesqui Grant Scheme 2002. In 2001, 12.4 per cent of the population was aged 65 years or older and 3 per cent were 80 years or older.
    [Show full text]
  • Yours, Mine, Or Ours? Charting a Course Through Equity's
    Yours, Mine, or Ours? Charting a Course Through Equity’s Determination of Domestic Proprietary Interests Kathrine Galloway ORCID: 0000-0002-8047-1210 Submitted in total fulfilment of the requirements for an award of Doctor of Philosophy Submitted 24 March 2017 Melbourne Law School ABSTRACT Distributing proprietary interests between domestic heterosexual partners remains the purview of the courts of equity, using the trust. In answering the question: ‘Whose property is this?’ the courts are faced with the tension between a property law system designed for the market, and property claims arising from within a couple’s intimate lives. The law’s market orientation favours the party best able to explain their claim in market terms. Because of the gendered structures of society and the family, the process tends to favour the man. This prompts the question central to this thesis: Does equity have the capacity to determine domestic proprietary interests consistent with equality between men and women intimate partners in light of pervasive gender inequality? Existing analysis of intimate partner trusts predominantly suggests new redistributive mechanisms to resolve the problem of equality. Other work describes the law’s evolution towards more ‘familial’ approaches as ameliorating the unfairness of market norms applied to intimate relationships. This thesis adds to the literature by using relational theory to focus instead on equity’s existing property-based distributive framework, charting a course through the tensions inherent in the application of market principles to the intimate context. The tensions of individual and community, market and home, arise from the tenets of liberalism built into private law.
    [Show full text]
  • A Mirror to the Man Reflecting on Justice William Deane: a Private Man in Public Office
    Heather Roberts* A MIRROR TO THE MAN REFLECTING ON JUSTICE WILLIAM DEANE: A PRIVATE MAN IN PUBLIC OFFICE AbstrAct Sir William Deane was a member of the High Court of Australia during one of its most creative periods, from 1982 to 1995. His decisions displayed a notable commitment to social justice and a willingness to extend the constitutional protection of human rights. These tendencies were particularly prominent during the Mason Court years (1987–1995), manifesting in decisions including Mabo v Queensland (No 2) (1992) 175 CLR 1; Dietrich v The Queen (1992) 177 CLR 292; Leeth v Commonwealth (1992) 174 CLR 455; and the political communication cases of 1992 and 1994. Although his judgments displayed a clear vision of his judicial responsibilities, Deane adopted a strict extra-judicial silence regarding the principles that informed his judicial philosophy. However, as Australia’s 22nd Governor-General Deane was more open regarding his personal beliefs and their influence on his performance of those duties. This article utilises Deane’s public statements as Governor-General to shed light on the foundations of his judicial philosophy. In particular, as Governor-General Deane drew on his Christian faith to support his commitment to highlight the cause of indigenous reconciliation and the plight of the disadvantaged in Australia. This article argues that Deane’s spiritual convictions, as articulated in his vice-regal statements, can also be regarded as underpinning his understanding of his role as High Court Justice. I IntroductIon When Sir William Deane retired as Governor-General in 2001 he was regarded by many as one of Australia’s most prominent public figures, an ‘Australian living treasure’.1 Deane’s popularity, and critics, stemmed from his commitment to social * LLB (Hons), PhD (ANU), Lecturer, ANU College of Law.
    [Show full text]
  • Australian Law Journal and Australian Law Journal Reports
    Australian Law Journal and Australian Law Journal Reports INDEX TO VOLUMES 77-82 (2003-2008) Index compiled by ALAN WALKER BA (Hons), DipLib LAWBOOK CO. 2009 Customer Service and sales inquiries: Tel: 1300 304 195 Fax: 1300 304 196 Web: www.thomsonreuters.com Email: [email protected] Editorial inquiries: Tel: (02) 8587 7000 HEAD OFFICE 100 Harris Street PYRMONT NSW 2009 Tel: (02) 8587 7000 Fax: (02) 8587 7100 © 2009 Thomson Reuters (Professional) Australia Limited ABN 64 058 914 688 trading as Lawbook Co. ISSN 0813-4073 Published in Sydney by Thomson Reuters (Professional) Australia Limited 100 Harris Street, Pyrmont NSW 2009 Typeset by Thomson Reuters (Professional) Australia Limited, Pyrmont, NSW Printed by Ligare Pty Ltd, Riverwood, NSW Table of Contents Volumes 77-82 Page Preface .......................................................................................................................................................... iii General Editors of the Australian Law Journal ............................................................................................ iv Table of Authors .......................................................................................................................................... 1 Table of Cases ............................................................................................................................................. 15 General Index .............................................................................................................................................
    [Show full text]
  • An Examination of the Common Law Obligation of Good Faith in the Performance and Enforcement of Commercial Contracts in Australia
    Chapter One Introduction ‘ … the most important contractual issue of our time.’1 1.1 The Impact of the Classical Model The classical model of contract law2 was premised upon an adversarial ethic where contractual parties legitimately sought to maximise their own interests.3 Under this static model,4 ‘contract law simply set ground rules for self-maximising private ordering.’5 As a corollary of the underlying ideology of liberal individualism,6 (or, in a market context, ‘market individualism’),7 with the fundamental aim of protection of the individual as an autonomous subject,8 contractual performance and the exercise of contractual rights and discretions was virtually unrestrained by considerations of the reasonable expectations or the legitimate interests of the other party to the contact.9 It is these reasonable expectations10 or 1 The description of good faith employed by the Lord Chief Justice of England, Lord Bingham of Cornhill, ‘Foreword’ in R Harrison, Good Faith in Sales (1997) vi. In a similar manner, the implied requirement of good faith in contractual performance and enforcement has been described as perhaps the most important unresolved issue in Australian contract law: J W Carter and A Stewart, ‘Interpretation, Good Faith and the “True Meaning” of Contracts: The Royal Botanic Decision’ (2002) 18 JCL 182, 190. 2 A model consistent with, and reflective of, the economic theory of laissez-faire: A F Mason, ‘Contract, Good Faith and Equitable Standards in Fair Dealing’ (2000) 116 LQR 66, 70. 3 Acting in the manner of a straightforward maximiser, that is a person who attends only to their own interests: D Gauthier, Morals by Agreement (1986) as referred to by R Brownsword, ‘Positive, Negative, Neutral: the Reception of Good Faith in English Contract Law’ in R Brownsword, N Hird and G Howells (eds), Good Faith in Contract: Concept and Context (1999) 13, 32.
    [Show full text]
  • Emotionally-Transmitted Debt
    Australian Feminist Judgments Project Sexually-transmitted/ emotionally-transmitted debt 'Sexually-transmitted debt' (STD) typically refers to a situation where legal liability is spread from the principal debtor to his partner. While this may occur within a range of relationships and situations, the cases and commentaries mapped here relate to wives (and after 1998 also de facto partners) taking on economic liability for their husbands’ business borrowings or debts of the family company. The main concern is that the spouse takes on obligations due to the circumstances of the relationship, rather than an awareness of the liability or because she receives some benefit. The cases typically arise where there is company insolvency, husband bankruptcy or a relationship breakdown. Often the spouse liability results in the loss of a family home that has been provided as security. This part of the project maps cases, feminist commentary and law reform related to the recognition of STD within contract law and corporations law. We provide a summary of relevant cases and cite feminist academic commentary of the cases where available, noting whether this commentary is neutral, positive or negative. We also identify relevant law reform reports and industry or legislative intervention. In the map, we have identified women judicial officers in red text where known, and links to cases are provided if they are publicly available. This text is up to date to December 2014. Feminist academics have identified that STD can arise in a range of situations that tend to particularly impact upon women. These situations include where debts are incurred as a result of: family violence (Anrows 2015) or uneven power balance within the relationship; a wish to maintain relationships and to protect family; the impact of women’s traditional roles in the private space, such as the male assuming control of family finances; and a lack of opportunity to gain requisite business education or experience.
    [Show full text]