First Principles of Business Law

3.1. Protection against unconscionable conduct

3.2. Unconscionable conduct in breach of s 20 of the ACL

A, a farmer, leases a combine harvester from B Pty Ltd, a supplier of agricultural machinery. The lease is for three months, just long enough for A to harvest her crop of wheat. But unusually heavy rains delay harvesting and A asks B Pty Ltd to extend the lease by a month. B Pty Ltd, knowing it is practically impossible to lease harvesters elsewhere at short notice, and that any delay in harvesting will ruin the crop, demands ten times the normal rental for the extra month's lease. A agrees, but then wants the agreement changed so that only the normal monthly rental is payable for the additional month.  Do these facts disclose a breach of s 20 of the ACL? And if so, could a court change the agreed terms of the contract and enforce the new terms?

Click here to see section 20.

(a) On these facts it is likely that B Pty Ltd has engaged in conduct that is prohibited by s 20 of the ACL, but a court does not have the power to alter the agreed terms of a contract.

(b) On these facts it is likely that B Pty Ltd has engaged in conduct that is prohibited by s 20 of the ACL, and in these circumstances a court is empowered by the ACL to alter the terms of a contract.

(c) On these facts it is not likely that B Pty Ltd has engaged in conduct that is prohibited by s 20 of the ACL and the contract will be enforced on its agreed terms.