{"id":32617,"date":"2020-02-04T10:33:37","date_gmt":"2020-02-04T02:33:37","guid":{"rendered":"https:\/\/zegal.com\/?p=32617"},"modified":"2023-05-24T17:35:44","modified_gmt":"2023-05-24T09:35:44","slug":"unconscionable-contracts","status":"publish","type":"post","link":"https:\/\/zegal.com\/en-hk\/blog\/post\/unconscionable-contracts\/","title":{"rendered":"Unconscionable Contracts"},"content":{"rendered":"<div id=\"contentsContainer\">\n<div id=\"contents\">\n<p id=\"E89\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-large wp-image-32655\" src=\"https:\/\/zegal.com\/wp-content\/uploads\/2020\/02\/maria-teneva-vf4O1OwtPnk-unsplash-1024x683.jpg\" alt=\"\" width=\"1024\" height=\"683\" srcset=\"https:\/\/zegal.com\/wp-content\/uploads\/2020\/02\/maria-teneva-vf4O1OwtPnk-unsplash-1024x683.jpg 1024w, https:\/\/zegal.com\/wp-content\/uploads\/2020\/02\/maria-teneva-vf4O1OwtPnk-unsplash-300x200.jpg 300w, https:\/\/zegal.com\/wp-content\/uploads\/2020\/02\/maria-teneva-vf4O1OwtPnk-unsplash-768x512.jpg 768w, https:\/\/zegal.com\/wp-content\/uploads\/2020\/02\/maria-teneva-vf4O1OwtPnk-unsplash-1536x1024.jpg 1536w, https:\/\/zegal.com\/wp-content\/uploads\/2020\/02\/maria-teneva-vf4O1OwtPnk-unsplash-2048x1365.jpg 2048w, https:\/\/zegal.com\/wp-content\/uploads\/2020\/02\/maria-teneva-vf4O1OwtPnk-unsplash-640x427.jpg 640w, https:\/\/zegal.com\/wp-content\/uploads\/2020\/02\/maria-teneva-vf4O1OwtPnk-unsplash-1200x800.jpg 1200w, https:\/\/zegal.com\/wp-content\/uploads\/2020\/02\/maria-teneva-vf4O1OwtPnk-unsplash-1920x1280.jpg 1920w\" sizes=\"auto, (max-width: 639px) 98vw, (max-width: 1199px) 64vw, 770px\" \/><\/p>\n<h4>Avoiding unconscionable contracts<\/h4>\n<p id=\"E93\"><span id=\"E94\" class=\"qowt-font7-Arial\">There are good deals, and there are bad deals. It\u2019s all a part of the business. <\/span><\/p>\n<p><span id=\"E94\" class=\"qowt-font7-Arial\">And the law won\u2019t necessarily save you from a bad bargain. Sometimes, however, a bargain is not simply bad<\/span><span id=\"E95\" class=\"qowt-font7-Arial\"> \u2013 it\u2019s downright unconscionable.<\/span><span id=\"E98\" class=\"qowt-font7-Arial\"> And i<\/span><span id=\"E99\" class=\"qowt-font7-Arial\">n these cases, the person on the wrong end of the bargain may be able to find recourse in the law. <\/span><\/p>\n<h4>Hong Kong<\/h4>\n<p id=\"E101\"><span id=\"E102\" class=\"qowt-font7-Arial\">Legal recourse in Hong Kong exists in the form of statutes. There are, for example, general consumer protection provisions found in the <strong>Sales of Goods Ordinance (Cap. 26), the Supply of Services (Implied Terms) Ordinance (Cap. 457), and the Control of Exemption Clauses Ordinance (Cap. 284)<\/strong>, which all seek to regulate the conduct of contracting parties. The one that would fall squarely under the ambit of this article, is the <strong>Unconscionable Contracts Ordinance (Cap. 458)<\/strong> (the \u201c<\/span><span id=\"E103\" class=\"qowt-font7-Arial\">UCO<\/span><span id=\"E104\" class=\"qowt-font7-Arial\">\u201d). <\/span><\/p>\n<p id=\"E106\"><span id=\"E107\" class=\"qowt-font7-Arial\">The UCO applies only to contracts for the sale of goods or supply of services in which one of the contracting parties is a consumer<\/span><span id=\"E108\" class=\"qowt-font7-Arial\">. The aggrieved party may institute proceedings and seek the Court\u2019s agreement that the contract (or parts of it) is indeed unconscionabl<\/span><span id=\"E109\" class=\"qowt-font7-Arial\">e (and thus unenforceable). In <\/span><span id=\"E110\" class=\"qowt-font7-Arial\">accordance to section 6 of the UCO, which enumerates a number of factors to be considered, such <\/span><span id=\"E112\" class=\"qowt-font7-Arial\">as:-<\/span><span id=\"E114\" class=\"qowt-font7-Arial\"> <\/span><\/p>\n<ul>\n<li id=\"E116\" class=\"qowt-li-0_0 qowt-list qowt-stl-ListParagraph\"><span id=\"E117\" class=\"qowt-font7-Arial\">Bargaining strength \u2013 bargaining strength is relative, and ordinarily<\/span><span id=\"E118\" class=\"qowt-font7-Arial\">,<\/span><span id=\"E119\" class=\"qowt-font7-Arial\"> a service provider entering into standard boilerplate contracts would be deemed to be in a stronger position; <\/span><\/li>\n<li id=\"E121\" class=\"qowt-li-0_0 qowt-list qowt-stl-ListParagraph\"><span id=\"E122\" class=\"qowt-font7-Arial\">Whether the consumer was required to comply with conditions not reasonably <\/span><span id=\"E124\" class=\"qowt-font7-Arial\">necessary for the protection of the seller or service provider\u2019s legitimate interests; <\/span><\/li>\n<li id=\"E126\" class=\"qowt-li-0_0 qowt-list qowt-stl-ListParagraph\"><span id=\"E127\" class=\"qowt-font7-Arial\">Whether any undue influence was <\/span><span id=\"E128\" class=\"qowt-font7-Arial\">exerted,<\/span><span id=\"E129\" class=\"qowt-font7-Arial\"> or unfair tactics were deployed; and <\/span><\/li>\n<li id=\"E131\" class=\"qowt-li-0_0 qowt-list qowt-stl-ListParagraph\"><span id=\"E132\" class=\"qowt-font7-Arial\">The amount for which, or circumstances under which, the consumer could have acquired identical or equivalent goods or services from another party. <\/span><\/li>\n<\/ul>\n<p id=\"E135\"><span id=\"E136\" class=\"qowt-font7-Arial\">The Court will<\/span><span id=\"E137\" class=\"qowt-font7-Arial\">, therefore,<\/span><span id=\"E138\" class=\"qowt-font7-Arial\"> consider whether a contract is wholly or partially unconscionable based on the considerations listed under section 6, which is inexhaustive. <\/span><\/p>\n<p><span id=\"E138\" class=\"qowt-font7-Arial\">The UCO does not otherwise provide for a definition of the term \u201c<\/span><span id=\"E139\" class=\"qowt-font7-Arial\">unconscionable<\/span><span id=\"E140\" class=\"qowt-font7-Arial\">\u201d. There have been comments in the past over the UCO\u2019s deficiency in granting adequate protection to consumers. This was based on the Court\u2019s tendency to <\/span><span id=\"E141\" class=\"qowt-font7-Arial\">consider \u201c<\/span><span id=\"E142\" class=\"qowt-font7-Arial\">all circumstances<\/span><span id=\"E143\" class=\"qowt-font7-Arial\">\u201d. This meant that a contract may be considered to be conscionable as long as there was procedural fairness in the way the contract was formed. This le<\/span><span id=\"E144\" class=\"qowt-font7-Arial\">ad<\/span><span id=\"E147\" class=\"qowt-font7-Arial\">\u00a0to <\/span><span id=\"E148\" class=\"qowt-font7-Arial\">the<\/span><span id=\"E149\" class=\"qowt-font7-Arial\"> situation where a single unfair term cannot <\/span><span id=\"E150\" class=\"qowt-font7-Arial\">by itself<\/span><span id=\"E151\" class=\"qowt-font7-Arial\"> <\/span><span id=\"E152\" class=\"qowt-font7-Arial\">render<\/span><span id=\"E153\" class=\"qowt-font7-Arial\"> an entire contract to be unconscionable and thus unenforceable in the eyes of the UCO. <\/span><\/p>\n<h4>Australia<\/h4>\n<p id=\"E155\"><span id=\"E156\" class=\"qowt-font7-Arial\">Likewise, the conscionability of conduct is regulated by statute in Australia<\/span><span id=\"E157\" class=\"qowt-font7-Arial\"> in the form of the <\/span><span id=\"E158\" class=\"qowt-font7-Arial\"><strong>Australian Consumer Law<\/strong> (the \u201c<\/span><span id=\"E159\" class=\"qowt-font7-Arial\">ACL<\/span><span id=\"E160\" class=\"qowt-font7-Arial\">\u201d) set out in <\/span><span id=\"E161\" class=\"qowt-font7-Arial\">Schedule<\/span><span id=\"E162\" class=\"qowt-font7-Arial\"> 2 of the Competition and Consumer Act 2010. <\/span><span id=\"E164\" class=\"qowt-font7-Arial\">Similar to<\/span><span id=\"E166\" class=\"qowt-font7-Arial\"> the UCO, the ACL does not <\/span><span id=\"E167\" class=\"qowt-font7-Arial\">precisely define the scope of \u201c<\/span><span id=\"E168\" class=\"qowt-font7-Arial\">unconscionable<\/span><span id=\"E169\" class=\"qowt-font7-Arial\">\u201d conduct, preferring to have it be determined on a case-to-case basis. These will be decided in accordance with factors under <\/span><span id=\"E170\" class=\"qowt-font7-Arial\">ACL <\/span><span id=\"E171\" class=\"qowt-font7-Arial\">section 22, which are not dissimilar to those found under section 6 of the UCO. Australian courts, like their Hong Kong counterparts, will also consider any other factors they think relevant. <\/span><\/p>\n<p id=\"E173\"><span id=\"E174\" class=\"qowt-font7-Arial\">As alluded to above, the lack of <\/span><span id=\"E175\" class=\"qowt-font7-Arial\">a <\/span><span id=\"E176\" class=\"qowt-font7-Arial\">precise definition<\/span><span id=\"E177\" class=\"qowt-font7-Arial\"> <\/span><span id=\"E178\" class=\"qowt-font7-Arial\">helps<\/span><span id=\"E179\" class=\"qowt-font7-Arial\"> the Court in determining cases with flexibility. At the same time, this could make things difficult and uncertain for an aggrieved consumer, or even service providers or goods suppliers accused of unconscionable conduct.<\/span><span id=\"E180\" class=\"qowt-font7-Arial\"> After all, the natural meaning of the word \u201c<\/span><span id=\"E181\" class=\"qowt-font7-Arial\">unconscionable<\/span><span id=\"E182\" class=\"qowt-font7-Arial\">\u201d refers to something more than simply \u201c<\/span><span id=\"E183\" class=\"qowt-font7-Arial\">unfair<\/span><span id=\"E184\" class=\"qowt-font7-Arial\">\u201d or \u201c<\/span><span id=\"E185\" class=\"qowt-font7-Arial\">bad<\/span><span id=\"E186\" class=\"qowt-font7-Arial\">\u201d, something that is against the good conscience of society. <\/span><\/p>\n<p><span id=\"E186\" class=\"qowt-font7-Arial\">This is obviously subjective. I<\/span><span id=\"E187\" class=\"qowt-font7-Arial\">t would be prudent for <\/span><span id=\"E188\" class=\"qowt-font7-Arial\">all contracting parties to take precautions <\/span><span id=\"E189\" class=\"qowt-font7-Arial\">to<\/span><span id=\"E190\" class=\"qowt-font7-Arial\"> bear in mind the following practical tips.<\/span><\/p>\n<h4 id=\"E192\">For Consumers:<\/h4>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li id=\"E199\" class=\"qowt-li-0_0 qowt-list qowt-stl-ListParagraph\"><span id=\"E200\" class=\"qowt-font7-Arial\">Ensuring that all terms of the agreement are in writing. It is not uncommon for agreements to be supplemented or altered orally, and the lack of written evidence may complicate things unnecessarily down the road;<\/span><\/li>\n<li class=\"qowt-li-0_0 qowt-list qowt-stl-ListParagraph\">Ask for plain language explanations and obtain independent legal or financial advice if unsure. It is important to fully understand all the terms of the transaction you\u2019re getting into;<\/li>\n<li class=\"qowt-li-0_0 qowt-list qowt-stl-ListParagraph\">If you feel or become aware that you are being treated differently, voice out your concerns. If you cannot obtain a satisfactory explanation, remember that you are at liberty to walk away from the deal; and<\/li>\n<li class=\"qowt-li-0_0 qowt-list qowt-stl-ListParagraph\">Be aware of what the other side may be pulling off to exert pressure or trick you. For example, switching up contracts, only providing a signature sheet, not providing all the schedules to the contract etc. may all be methods to induce you into signing.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<div id=\"contentsContainer\">\n<div id=\"contents\">\n<h4 id=\"E211\"><span id=\"E212\" class=\"qowt-font7-Arial\">For service providers and suppliers<\/span><span id=\"E214\" class=\"qowt-font7-Arial\">:-<\/span><span id=\"E216\" class=\"qowt-font7-Arial\"> <\/span><\/h4>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul style=\"list-style-type: circle;\">\n<li id=\"E218\" class=\"qowt-li-0_0 qowt-list qowt-stl-ListParagraph\"><span id=\"E219\" class=\"qowt-font7-Arial\">Carefully assessing the characteristics and vulnerabilities of customers. For instance, customers from non-English speaking backgrounds may require plainer explanations;<\/span><\/li>\n<li id=\"E221\" class=\"qowt-li-0_0 qowt-list qowt-stl-ListParagraph\"><span id=\"E222\" class=\"qowt-font7-Arial\">Giving reasonably <\/span><span id=\"E224\" class=\"qowt-font7-Arial\">sufficient<\/span><span id=\"E226\" class=\"qowt-font7-Arial\"> time and space for customers to consider the contract. It is also important to avoid saying or doing anything that may one day be argued in Court to <\/span><span id=\"E227\" class=\"qowt-font7-Arial\">have been said or done <\/span><span id=\"E229\" class=\"qowt-font7-Arial\">in an attempt to<\/span><span id=\"E231\" class=\"qowt-font7-Arial\"> <\/span><span id=\"E233\" class=\"qowt-font7-Arial\">pressurise<\/span><span id=\"E235\" class=\"qowt-font7-Arial\"> the customer;<\/span><\/li>\n<li class=\"qowt-li-0_0 qowt-list qowt-stl-ListParagraph\">Giving customers the time and opportunity to seek legal advice if they so require; and<\/li>\n<li class=\"qowt-li-0_0 qowt-list qowt-stl-ListParagraph\">Doing all you can to draw the customers\u2019 attention to important or unusual terms or conditions.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<div class=\"group w-full text-gray-800 dark:text-gray-100 border-b border-black\/10 dark:border-gray-900\/50 bg-gray-50 dark:bg-[#444654]\">\n<div class=\"flex p-4 gap-4 text-base md:gap-6 md:max-w-2xl lg:max-w-xl xl:max-w-3xl md:py-6 lg:px-0 m-auto\">\n<div class=\"relative flex w-[calc(100%-50px)] flex-col gap-1 md:gap-3 lg:w-[calc(100%-115px)]\">\n<div class=\"flex flex-grow flex-col gap-3\">\n<div class=\"min-h-[20px] flex flex-col items-start gap-4 whitespace-pre-wrap break-words\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p>It&#8217;s important to be cautious and proactive to avoid unconscionable conduct. By practicing diligent <a href=\"https:\/\/zegal.com\/blog\/post\/the-future-of-contract-management-top-trends-and-predictions-for-2023-and-beyond\/\">contract management<\/a>, parties can prevent or address situations that may be deemed unfair or unethical. Taking precautions and ensuring transparency in contracts helps protect the rights and interests of all involved parties, promoting ethical business practices and maintaining the integrity of contractual relationships.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"flex justify-between lg:block\">\n<div class=\"text-gray-400 flex self-end lg:self-center justify-center mt-2 gap-2 md:gap-3 lg:gap-1 lg:absolute lg:top-0 lg:translate-x-full lg:right-0 lg:mt-0 lg:pl-2 visible\"><button class=\"flex ml-auto gap-2 rounded-md p-1 hover:bg-gray-100 hover:text-gray-700 dark:text-gray-400 dark:hover:bg-gray-700 dark:hover:text-gray-200 disabled:dark:hover:text-gray-400\"><\/button><\/p>\n<div class=\"flex gap-1\"><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p class=\"p1\" style=\"text-align: center;\"><b><i>This article does not constitute legal advice.<\/i><\/b><\/p>\n<p class=\"p2\" style=\"text-align: center;\"><i>The opinions expressed in the column above represent the author\u2019s own.<\/i><\/p>\n<p class=\"p3\" style=\"text-align: center;\"><span class=\"s1\"><a href=\"https:\/\/register.zegal.com\/\"><b>Start managing your legal needs with Zegal today<\/b><\/a><\/span><\/p>\n<p><a href=\"https:\/\/zegal.com\/blog\/post\/vicarious-liability-what-is-it-and-who-is-at-fault\/\">RELATED READING: Vicarious Liability, Who Is At Fault?<\/a><\/p>\n<p><a href=\"https:\/\/zegal.com\/blog\/post\/5-tips-for-launching-your-business\/\">READ MORE: 5 Tips For Launching Your Business<\/a><\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Avoiding unconscionable contracts There are good deals, and there are bad deals. It\u2019s all a part of the business. And the law won\u2019t necessarily save you from a bad bargain. Sometimes, however, a bargain is not simply bad \u2013 it\u2019s downright unconscionable. And in these cases, the person on the wrong end of the bargain [&hellip;]<\/p>\n","protected":false},"author":51,"featured_media":32649,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_editorskit_title_hidden":false,"_editorskit_reading_time":0,"_editorskit_is_block_options_detached":false,"_editorskit_block_options_position":"{}","inline_featured_image":false,"footnotes":""},"categories":[42],"tags":[1812,30,7043,10307],"usecases":[],"businesstypes":[],"country":[],"class_list":["post-32617","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-customers","tag-australia","tag-hong-kong","tag-legal","tag-z-syndicate"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v20.8 (Yoast SEO v27.3) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Unconscionable Contracts | Everything you need to know | Zegal Hong Kong<\/title>\n<meta name=\"description\" content=\"Everyone from business owners to consumers should avoid unconscionable contracts. 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