Understanding Unconscionable Conduct In Contract Law: A Case Analysis

Background context

Simon and Dianne Lee (SADLee) was small business operators of a fish and chip shop. Their property was at the leased premises in Runaway Bay Shopping Centre owned by CashMax and MeaNNess were its directors However; this big corporate company was undergoing certain personal issues of their own. Most of their tenants stood to recover around $3,000 whereas SADLee thought they might recover more.

As SADLee faces a family emergency where in their daughter, Violet is diagnosed with contracted encephalitis, her condition was very difficult to treat and of course, expensive. After her last appointment with the doctor, SADLee were told that their daughter has less time left. Also, that her treatment will be possible in Mexico. SADLee were worried as they were facing stress in their professional, working life and now their daughter was diagnosed which mean their doctor has to undergo a serious treatment which would be expensive as well, SADLee had to sell their business which was an issue as there were 12 months left for the lease to run and no purchaser would prefer to buy a business without security of lease. However, they finally found a purchaser, Dutch.

Under a different circumstance, per say, if Dutch attends the Settlement with Simon and Dianne however confesses that he doesn’t has money and pretended to buy the business only for the sake of coming on the radio, it would have left SADLee in a huge legal issue, however, as provided in the question, the financial issues of SADLee is looked after by their wealthy relatives. In such position as that of SADLee’s one must choose between avoiding the Lease on the basis of unconscionable conduct or not.

Here, in the case of SADLee, it will be advised that he would avoid lease on the basis of unconscionable conduct. An Unconscionable conduct probes into a sudden action wherein an individual becomes unreasonable that it defies good conscience. It approves to be an unjust action in favor of the person who has the superior bargaining power. It also delves into a matter of the acquisition of goods or services in business transactions.

Unconscionability, in this case, will help to determine the circumstances of the SADLee when the contract was made. It helps in examining areas of bargaining age, power, and mental capacity and also it might include other issues, such as superior knowledge and various obligations or circumstances of the concerned contract. Unconscionable examines actions within drudgery, that is, Dutch in our case, for which he shall be punished and pressed charges against. Dutch might as well have also misinterpreted the situation as he chose to make an offer without considering the fact that he does not hold that amount of money in his account and might go bankrupt. Such deliberate misinterpretation of facts deprives someone of valuable possessions. An advantage takes over by one party on another can be referred to as criminal fraud or the civil action of deceit.

If SADLee had not avoided such a lease, they would have become victims of fraud. People, parties and/or groups that suffer and are victimized under the crime of unconscionable conduct can press charges, however, would have to face the loss. For multinational corporations, the amount of penalty can vary and may increase to around $10,000,000.

Advice for SADLee

My advice for SADLee would be to avoid the unconscionable conduct and save the rest of the money that is invested by the rich relatives for better investments and/or start-ups. Considering the serious situation of SADLee’s daughter on deathbed, the family is supposed to pay a heavy amount to the medical insurance company. Also, the 7-year lease would not have been as of much use to the SADLee’s as their other financial problem would have been alleviated by the same money, offered by the relatives.

Another issue to deal with would be the charges pressed against Dutch for fraud as no amount of money was offered and the deal was made on false terms. If, persay, SADLee’s relatives wouldn’t have offered the money, the SADLee’s would have faced debt in turn of the wise decision of selling the business for the betterment of their daughter’s health. In order to look after the wellbeing of their daughter and their future together and not being filed against the false accusation of being unfair under the terms of unconscionable conduct the SADLee’s family would benefit from the decision of avoiding the Lease based on unconscionable conduct.

The lease, which was being prepared by MeaNNess, did not consider the plight of the owners of SADLee, even after their request to do so. While they were happy that MeaNNess has decided to cooperate with them in time of need, they ultimately came to know that the solicitors of MeaNNess have prepared a new lease for 7 years, which would benefit them, ad put SADLee into greater debt and trouble. It was right for the owners of SADLee to call out to the people at MeaNNess and question them based on unconscionable conduct because they stepped away from their initial promise. A similar case happened in the year 2011 between a tenant of a grocery store and the property owner who owned the place. The case was between Nhung Huy Duong and Coventry Village Pty Ltd where the tenant failed to pay the rent at the beginning of the month for consecutive months despite of repeated warnings and notices from the landlord. Therefore, in the year 2014 the property owner decided to terminate the first lease for non-payment of the rent and offered a second lease in a different spot of the same market. The tenant called the conduct as unconscionable and resisted the second lease as the location was being changed and because the landlord cannot cancel the first lease if the payment was made in that month itself.

According to Linda et al. (2013), while the tenant called out that, the acceptance of late rent by the landlord for a long time estopped him from terminating the lease. The tribunal on the other hand decided that the landlord worked under all legal obligations and did everything which was normal for a good businessman. He decided that there were no schemes, which were devious, involved in the lease as the property owner reminded the tenant for rent. In this case however, MeaNNess did not bother to inform SADLee of the new clauses for some time and when they were presented, it was wholly different from what was decided upon which is a breach of trust and can be termed unconscionable. 

Background context

Thread of events

On Dec 2018, a SADLee witnessed family illness where MeaNNess is suffering from heart disease.  It was determined that radio is the best platform where both can talk about their problems. It is noted that fresh document needs to be prepared without the release of increased rent. However, under the severe circumstance, the settlement was preceded between SADLee and MeaNNess.  But, demise occurred when MeaNNess died due to a bus hit. After a year, CashMax intended to avoid the lease and Deed in order to increase rent clauses.

SADLee narrates their story to MeaNNees and it affects them emotionally which results in the change of their decision as they decide to email their solicitors for the preparation of fresh documents without releasing and or increasing the rent. The solicitor counsel does question back against it, however, MeaNNees insist and therefore the solicitors agree and the rent is not increased, it is stabled.

Later, Simon underwent an emotional breakdown as a consequence of utter stress of financial issue that he pulls off a stunt including his child’s gun and threatening the owners as he is very anxious.

Later in the month, on the third day of December, MeaNNees, runs into a car accident and die instantly. Around one year later, new directors of CashMax decide about avoiding the Lease and Deed. Another decision of the new directors included an increase in the rent which again, bothered the solicitors.

The new directors of CashMax, when come into power should not take such a drastic step. The duress between other fellow tenants and solicitors could turn very ugly. My advice for the new directors would be to avoid duress and it can be harmful to both the parties. Duress, legally, refers to constraint illegally exercised to force someone to perform an act. It can also be forceful.

Duress in American law that befits the situation wherein an individual or a charged-person act through violence. If the new directors within the current case allowed its solicitors to be violent, it will deliver violent consequences. There can be possible threats that force to persuade an individual to sign the contract. This leads to unkind of coercion or action between individuals that could also be either physical or psychological. It is here when an individual feels that he has no possibility left, other than to sign the contract. He is under some kind of uneventful or unwanted force that could also be difficult to be proven in an exceeding court of law. In such cases, an individual relies on the utilization of physical force or the plausible threat of physical hurt and sentiment. When or if proven, the agreement quickly ends up in nullification of the contract. Here is the criminal is charged against the offender.

Duress isn’t exclusively a defense within a contract case. In order to claim force during a criminal trial, it is important for the individual to prove 3 components that are discussed below-

1. The immediate threat of death or serious bodily damage –in this case, grudges and actions are limited to through physical actions, or through the use of abusive words. In certain cases, a threat is common to be directed toward the defendant. Here, the court might take into account a legitimate threat toward his family.
2. The individual accused can face real fear while carrying out a threat– the threat is under constant investigation. The individual charged of threat is examined of being justifiable or reasonable or someone else is to be held of charge. Under no legal circumstance without prior notice, proof, and reason can an individual be charged of threat.  
3. 3. The accused individual when has no reasonable opportunity in escaping a particular threat except by committing a criminal act – in here the defendant is kept in the notice and is mostly suffering as finds that he has no choice but to comply with it.

In the year 1976, there was a case between Barton v Armstrong where two people were involved in a contract and one of them was going to invest in the property of the other. In the case, Barton claimed that he accepted the clauses set by Armstrong and was ready to buy his shares as he was threatened by Armstrong to sign the documents. It was under much stress and anxiety, Barton accepted the terms put forward as he feared for his safety. Barton claimed the document to be termed void as it was prepared under duress. Therefore, the Privy Council decided that if the threat from A was the reason for B to sign the deal, then he could be relieved from the agreement. Now it was A’s duty to prove that the threats had nothing to do with the deal and only then he can save the agreement.

Here in the case of SADLee, a person who was not mentally stable because of the emotional stress of his child made the threats. The threats were made by a toy gun and to a person who no longer is in the picture. Therefore, to make an issue of that is not plausible. As stated by Linda et al. (2013), the new directors who decided to call on the point of duress were not related to the incident, which happened log before they were involved with the case.

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