LAW2102 · Contract B
Statutory Unconscionability & Remedies (ACL ss 20–22, 236–243)
The final chapter covers statutory unconscionability and the Australian Consumer Law remedies that close out a contract problem. Section 20 mirrors the equity standard and is residual (it cannot be used where s 21 applies); section 21 covers conduct connected with the supply or acquisition of goods or services and is broader than the common law — not limited to special-disadvantage cases and able to capture post-contractual conduct — judged against a normative standard of acceptable commercial behaviour (Lux; Kobelt; Stubbings v Jams 2). Section 22 lists the factors a court may weigh. The remedies run through s 236 (damages), s 237 and s 243 (compensatory and rescission-type orders/refund). It is examined as the remedy and statutory-unconscionability stage of an ACL problem.
What this chapter covers
- 011. ACL s 20 — unconscionable conduct within the meaning of the unwritten law (equity); residual (not if s 21 applies)
- 022. ACL s 21 — statutory unconscionability connected with supply/acquisition of goods or services
- 033. s 21 is broader than the common law (s 21(4)(a)) and can capture post-contractual conduct (s 21(4)(c))
- 044. The normative standard — conduct 'far outside the norms of acceptable commercial behaviour' (Lux; Kobelt)
- 055. Stubbings v Jams 2 (2022) — predatory asset-based lending; s 21 made out
- 066. The s 22 factors — bargaining positions, unfair tactics, availability elsewhere, consistency, good faith
- 077. Remedies — s 236 damages 'because of' a contravention (causation)
- 088. Remedies — s 237/243 compensatory and rescission-type orders/refund (guided by equitable rescission; Henjo)
Statutory unconscionability (s 21) and ACL remedies (Topics 17–18)
- 2 marksIssue. Has Verde engaged in statutory unconscionable conduct (s 21), and what remedies follow?
- 3 marksRule. Section 21 ACL — unconscionable conduct in connection with the supply of goods/services — is broader than the common law (s 21(4)(a)), can capture post-contractual conduct (s 21(4)(c)), and is judged against a normative standard of acceptable community values / conduct 'far outside the norms of acceptable commercial behaviour' (Lux; Kobelt; Stubbings v Jams 2). The s 22 factors include bargaining positions (a), unfair tactics (d), availability elsewhere (e), consistency with similar transactions (f) and good faith (l). Remedies: s 236 damages; s 237/s 243 compensatory + rescission-type orders/refund (guided by equitable rescission and Henjo).
- 4 marksApplication. Verde's premium pricing, exploitation of Kettle's reliance, and inconsistency with how it treated other clients (genuine local tea — s 22(f)), plus a refusal to refund (post-contractual, lack of good faith — s 22(l)), arguably fall far outside acceptable commercial norms (Lux; Kobelt). Remedies: s 236 damages (reduced value, returned-stock loss, lost profit, reputational harm) and s 237/243 orders to refund/rescind — but rescission may be limited where some tea was on-sold (substantial-restoration limits, Henjo).
- 3 marksConclusion. Verde likely contravened s 21 ACL; Kettle should claim s 236 damages and seek s 237/243 compensation/refund, accepting that rescission may be partial given the on-sold stock.
Key terms
- ACL s 20
- Prohibits unconscionable conduct 'within the meaning of the unwritten law' — i.e. the equitable Amadio standard. It is residual: it cannot be relied on where s 21 (statutory unconscionability in connection with supply/acquisition) applies. In practice s 21 does most of the work.
- ACL s 21
- Prohibits unconscionable conduct in connection with the supply or acquisition of goods or services. It is broader than the common law (s 21(4)(a)) — not confined to special-disadvantage cases — and can capture post-contractual conduct (s 21(4)(c)). It is judged against a normative standard of acceptable commercial behaviour.
- Normative standard
- The benchmark for s 21: conduct that is against conscience by reference to a normative standard of acceptable community values — conduct 'far outside the norms of acceptable commercial behaviour' involving dishonesty, trickery, sharp practice or unfair tactics (Lux; Kobelt; Stubbings v Jams 2).
- The s 22 factors
- A non-exhaustive checklist a court may consider under s 21, including relative bargaining positions (a), unfair tactics (d), the price/terms available elsewhere (e), consistency with conduct in similar transactions (f), applicable industry codes (g), failure to disclose intended conduct (i) and the extent of good faith (l).
- ACL s 236 damages
- Damages for loss or damage suffered 'because of' a contravention of the ACL (such as s 18 or s 21). It requires causation between the contravening conduct and the loss — the statutory analogue of the common-law causation requirement for damages.
- ACL ss 237 & 243
- The court's compensatory and other-orders powers. Section 237 allows orders to compensate, prevent or reduce loss; s 243 lists the menu of orders the court may make — including declaring a contract void, varying it, refunding money, and rescission-type relief. These orders are guided (not controlled) by the considerations applying to equitable rescission, including the Henjo principles.
Statutory Unconscionability & Remedies (ACL ss 20–22, 236–243) FAQ
When do I use ACL s 21 rather than s 20?
Use s 21 whenever the conduct is connected with the supply or acquisition of goods or services — which is most commercial dealings. Section 20 is residual and applies the equitable Amadio standard, but it cannot be used where s 21 applies. Because s 21 is broader (not limited to special-disadvantage cases and able to catch post-contractual conduct), it is usually the stronger and correct pleading for a supply/acquisition problem.
How is statutory unconscionability broader than the common law?
In two key ways. First, s 21(4)(a) confirms it is not limited to the common-law special-disadvantage cases (Amadio), so a wider range of conduct can qualify. Second, s 21(4)(c) allows it to capture post-contractual conduct — how a party behaves in carrying out the contract, not just in forming it. The standard is also normative: conduct 'far outside the norms of acceptable commercial behaviour' (Lux; Kobelt; Stubbings v Jams 2).
What are the s 22 factors and how do I use them?
Section 22 lists a non-exhaustive set of considerations a court may weigh, such as relative bargaining positions, unfair tactics, the price/terms available elsewhere, consistency with how the party treated others in similar transactions, industry codes, non-disclosure of intended conduct, and good faith. In an answer, pick the factors the facts engage and use them as the structure of your application — they are the analytical scaffold for s 21.
What remedies are available for an ACL contravention?
Section 236 gives damages for loss suffered 'because of' the contravention (causation required). Sections 237 and 243 give the court a menu of compensatory and other orders — to compensate, prevent or reduce loss, declare a contract void, vary it, refund money, or grant rescission-type relief. These orders are guided by the same considerations as equitable rescission, including the Henjo principles, so factors like on-sold goods can limit rescission. Note the ACL pecuniary-penalty provisions and the damages-measurement cases are not examinable.
How is this topic examined?
As the remedy and statutory-unconscionability stage of an ACL problem, often following a s 18 contravention. Choose s 21 (supply/acquisition; broader; post-contractual) over the residual s 20, apply the normative standard with Lux/Kobelt/Stubbings v Jams 2, structure the application around the s 22 factors, then run the remedies — s 236 damages and s 237/243 orders, flagging any limit on rescission (Henjo). The ACL penalty provisions and damages-measurement cases are excluded.
Exam move
Lock down the s 20-vs-s 21 chooser first: if the conduct is connected with supplying or acquiring goods or services, go to s 21 (broader, post-contractual capable) and treat s 20 as residual. For s 21, learn the normative standard ('far outside the norms of acceptable commercial behaviour') with Lux, Kobelt and Stubbings v Jams 2, and use the s 22 factors as the skeleton of your application — pick the ones the facts engage (bargaining position, unfair tactics, availability elsewhere, consistency, good faith). Always finish with the remedies: s 236 damages (causation 'because of'), and s 237/243 compensatory and rescission-type orders, noting that on-sold goods or delay can limit rescission (Henjo). Keep the chooser-plus-factors-plus-remedies diagram in your kit, and remember the exclusions — ACL pecuniary-penalty provisions and the damages-measurement cases (Marks/Gates/Murphy) are not examinable.
