Undesirable business practices; unconscionable conduct; compliance with an industry code
Facts: In 1991 Garry Rogers Motors (GRM) was appointed under a franchise agreement with Subaru as an authorised dealer of Subaru cars for three years. In 1994 the appointment was renewed. GRM indicated an unwillingness to comply with some new requirements imposed by Subaru. As a result Subaru decided to terminate GRM's appointment as a dealer. When informed of this decision, GRM then said it would do whatever Subaru wanted, but Subaru refused to change its mind.
Issue: Was Subaru's decision to terminate the appointment a breach of s 51AC of the Trade Practices Act 1974 (Cth)?
Decision: There was no unconscionable conduct in breach of s 51AC.
Reason: Section 51AC listed failure to comply with an industry code of conduct as a factor which may indicate unconscionable conduct. The relevant code in this case required a franchisor to provide written reasons when terminating a franchise agreement.. In this case Subaru had not provided written reasons. However, despite the reasons for the termination not being put into writing, they were well known to the parties. The court held that while an aspect of the industry code had not been complied with, this was insufficient in the circumstances to amount to unconscionable conduct by Subaru.
Note: Although this case concerns s 51AC of the Trade Practices Act 1974 (Cth), it continues to be relevant to the interpretation and application of s 20 and 21 of the Australian Consumer Law.