Clarification on commercial law grey area

A new study from the University of Adelaide has revealed key markers that influence how commercial behaviour is perceived by courts, clarifying the line between legal and illegal conduct in commercial law

University of Adelaide

A new study from the University of Adelaide has revealed key markers that influence how commercial behaviour is perceived by courts, clarifying the line between legal and illegal conduct in commercial law.

Study author Dr Mark Giancaspro explains that Australian Consumer Law prohibits businesses and consumers from engaging in ‘unconscionable conduct’ in trade or commerce.

“Essentially, unconscionable conduct is defined as seriously repugnant or unacceptable commercial conduct, such as exploiting someone’s disadvantages for profit,” says Dr Giancaspro, whose study was published in UNSW Law Journal.

“Examples would be pressuring an elderly person into buying an expensive car, convincing someone who is intoxicated to sell their house for a pittance, or using overwhelming sales tactics to corner someone into signing a contract.

“Unconscionable conduct is illegal, but conduct that is considered merely ‘unfair’ is not. The problem is, it isn’t clear when conduct crosses the line from unfair to unconscionable.”

Through his analysis of cases where unconscionability was alleged but not proven, Dr Giancaspro found that courts tend to perceive commercial behaviour along a spectrum.  

“In short, unconscionable conduct lies at one end of the spectrum, and immoral or unfair conduct at the other,” he says.

“Where in that spectrum the courts place a particular behaviour depends on a range of opaque factors which apply differently from case to case. However, my research identified what can be described as a 'default' perception by judges as to the gravity of various forms of business conduct.

“Courts often accept that commercial parties occasionally act in ways that might be seen as 'unfair', and that more is needed to cross the line from becoming unethical to illegal. My research identified patterns in how judges make this distinction.”  

Dr Giancaspro’s paper provides insight into a largely underexplored area of commercial law, which often analyses when commercial behaviour is unconscionable rather than when it is not unconscionable.

The findings offer practical guidance for consumers, businesses, and legal professionals on navigating the grey areas of commercial conduct and ensuring fair practices in the marketplace, and there is potential for further research in this area.

“A broader sample of cases in which unconscionability was alleged but not proven would help to provide an even more representative spectrum of commercial behaviour,” Dr Giancaspro says.

“It would also be helpful to perform an analysis with consumers and businesses to understand how their perception of commercial conduct aligns or runs contrary to that of judges.”

Dr Giancaspro is an expert in the field of commercial law and consumer protection, with his new book, Consideration in Contract Law, having launched in October this year, and others on the way in 2025.

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Journal

University of New South Wales Law Journal

Method of Research

Case study

Subject of Research

People

Article Title

Pushing Equity’s Envelope: Probing the Arbitrary Distinction between Immoral and Unconscionable Commercial Behaviour

Article Publication Date

13-Dec-2024