Conscience, Fair-dealing and Commerce - Parliaments and the Courts

"Finn's Law: an Australian justice"
A conference in honour of Professor Paul Finn

Chief Justice Allsop 25 September 2015

RTF version (599kb)

1   The concern of this paper is the way certain values and principles inform commercial life, and thus commercial law.

2   As soon as one speaks of "values" and "principles", one invites a debate about how law works in the pragmatic and self-interested world of commerce. It also invites a debate about the nature of law, the relationship between principle and rule, and whether one is more conducive to certainty than the other. These debates are rooted in different visions of law as command, as will, or as the expression or manifestation of natural human or societal bonds of conduct. Conscience and fair dealing have honesty and a sense of justice at their root and, in one form or another, have central roles to play in framing rules for commerce.

3   Paul Finn has thought and written about all these inter-connections. He has influenced generations of lawyers, myself very much included. My debt can never be repaid.

4   In preparing this paper I revisited Patrick Atiyah's Rise and Fall of Freedom of Contract[1]. Its preface reminded me of talking with Paul Finn. To borrow and paraphrase a sentence from that preface, this paper should be seen as offering hypotheses rather than proposing definite solutions. Paul never declared a proposition in discussion; he brought forth an idea by thoughtful hypothesis.

5   One aspect of the importance of Paul Finn's work has been his recognition of the need to conform rules to principles and to develop principles, and therefore rules, from stable foundations built on practical, honest decency. Crucial in the balance of a legal system is the relationship between rule and value, between definition and flexible evaluation. One aspect of that balance is the achievement of certainty and doing justice – not as a dialectical process of the confronting of opposites, but by the wise balance of the competing demands of law through the recognition that law is life, and life is infused with values and norms.

6   Law is not just command; it is a societal will capable of rational and general expression, engendering loyalty and consent through its utility and practicality and through its characteristics of certainty, fairness and justice. Law can, ultimately, only work practically and usefully through consent and loyalty.

7   No system of law can engender loyalty and consent without an inhering justice – some intuitive response from acceptable and accepted values, not necessarily by reference to each individual provision within the system, but by reference to its whole, including its defects and its shining examples. Each gives content to the whole. Nothing is perfect. Further, no system of law can engender a sense of security without certainty.

8   Commercial law is no different. It must be certain, but fair and just; simple and practical, but comprehensive; and it must be able to be employed and enforced, without undue expense, delay or confusion. Commerce and trade have a central place in the formation of a sophisticated legal system. Commerce produces the need for rules of relational activities.[2] Jhering spoke of the fact that: "Long before the State arose from its couch, in the morning twilight of history, trade had already completed a good part of its day's work. While the States were fighting one another, trade found out and levelled the road which led from one people to another, and established between them a relation of exchange of goods and ideas; a pathfinder in the wilderness, a herald of peace, a torchbearer of culture."[3] This is one reason why commercial law is important. It forms the legal and moral norms of a society for exchange and relation with other peoples.

9   The obligation of the commercial lawyer and the commercial judge is to understand the limits of legitimate self-interest and the relationship between self-interest, in its inherently selfish character, and honesty, reasonableness, decency and trust, being the qualities that make it possible for commercial people to be self-interested, but to deal with each other peacefully and with mutual benefit.

10   The law, and commercial law, as a manifestation of will of a decent and honest society, should exhibit those qualities in the balance and harmony of its certainty, values, norms, rules and principles: set by Parliaments, the Courts, the Executives, and by society as a whole.

11   This is why the underlying conceptions – the foundations – of the law, and of commercial law, must be sound so as not to give form to mis-shapen rules[4]. If the balance of the foundations, and the rhythm of the foundational ideas, be discordant or distorted, so, in all likelihood, will be the rules of conduct of human engagement. This is not to say that the law must always exhibit symmetry or structural or logical beauty; it cannot, because it must conform to life and humanity, which do not always exhibit symmetry or structural or logical beauty. Sometimes, no simple rule will suffice, because human nature and life are too complex, diverse and intricate to be compressed into a simple formula.

12   The proper balance of values and norms in the fabric of the law and in the creation of certainty in the law must also recognise the requirement that principle and rule conform to moral standards as the gauge of the law's flexibility and as its avenue for growth, but without confounding law by the suspension of principle and rule and by the drift into a void of sentiment and personal intuitive benevolence, being the antithesis of law – the exercise of personal will.

13   This is not the place to analyse the movement of the tides of legal doctrine drawn by the pull of Lord Mansfield's thinking. In 1950 in reflecting on that question, Professor John Dawson[5] saw the conscious and vigorous reaction to Moses v Macferlan[6] in cases such as Sinclair v Brougham,[7] Baylis v Bishop of London[8] and Holt v Markham[9] as a phase of basic change in English legal method and attitudes that reflected an unwillingness to alter legal rules that had been pronounced by the courts, and that displayed an emphasis on rules derived from narrow and literal reading of decisions; it disclosed a view of the legal system as closed and self-sufficient in its reference: a positivist view of precedent and rules. That this may have been more a feature of English common law than Equity, he noted,[10] can be seen in the broader, more principled and value-laden approach of Equity. This is notably seen in the distinction between legal method at common law (at least in the era of jury trials) and legal method in Equity discussed with such illumination in Jenyns v Public Curator[11] by Dixon CJ, McTiernan and Kitto JJ:

 

"The jurisdiction of a court of equity to set aside a gift or other disposition of property as, actually or presumptively, resulting from undue influence, abuse of confidence or other circumstances affecting the conscience of the donee is governed by principles the application of which calls for a precise examination of the particular facts, a scrutiny of the exact relations established between the parties and a consideration of the mental capacities, processes and idiosyncrasies of the donor. Such cases do not depend upon legal categories susceptible of clear definition and giving rise to definite issues of fact readily formulated which, when found, automatically determine the validity of the disposition. Indeed no better illustration could be found of Lord Stowell's generalisation concerning the administration of equity: 'A court of law works its way to short issues, and confines its views to them. A court of equity takes a more comprehensive view, and looks to every connected circumstance that ought to influence its determination upon the real justice of the case: The Juliana.'"[12]

14   The search for the balance between coherent principles and rules (whether the latter are framed or dictated by forms of action, or procedure, or narrowly confined precedent or statute) may perhaps be seen in the development, and struggle over the structure, of the law of restitution or unjust enrichment, a struggle that has spanned centuries.[13] At what level of abstraction is the statement that "a person who has been unjustly enriched at the expense of another is required to make restitution to that other" useful or valid or operative? The High Court has been clear that such a statement is not an operative rule to decide upon liability; rather, it is an informing and unifying legal concept.[14] Other areas related to commerce involve the same search for balance – the place of good faith or fair dealing, and of conscience in holding those in commerce to honest decent behavior. The place of an informing or unifying legal concept has been, and will remain, critical to the coherent development of the law of restitution of, or for, unjust enrichment. It assists in the ordering of related ideas and principles that have come into use over time from different sources. An informing or unifying legal concept can also form a bridge between law and Equity. One example is the remedy of restitution or money had and received upon a failure of consideration, and the Quistclose trust and the resulting trust; another is the restitutionary monetary remedy (at law, if one likes) for a proprietary benefit traceable in equity (but not law) into the hands of a volunteer.[15]

15   One part of the balance between principle and rule is the ability of less particularly expressed principle to accommodate changes in values in society, without the need to change rules. Conceptions of legal liability and what is right and just to be vindicated by law change with time and with changes in society. This balance is essential to meet the challenge of the need for stability with the inevitability of change.[16] Generally expressed principles are likely to capture such changes without the need for re-expression. This helps vindicate the necessity for historical continuity.[17]No more eloquent example of this can be seen in the expression by Cardozo CJ of two fundamentally important duties in commercial law – that of the fiduciary and that of the participant in the market in Meinhard v Salmon.[18] The "punctilio of an honor the most sensitive" of the former compared to the "morals of the market place" (by which he meant honesty) of the latter.

16   Examples abound of changes to conceptions of what should be vindicated by law. The original notion of a tort to one's person or property was the act of a stranger in which the plaintiff had no part: asportation, battery or trespass. A person who requested another to act, and that other did so in a fashion causing harm, would be without remedy.[19] The original development of assumpsit as a species of trespass on the case then provided relief. A more striking example is how honesty is viewed. In the early 17th century, a distinction was said to be drawn between a vendor giving a warranty as to quality (which was actionable) and a vendor stating the fact of the quality which was inaccurate (which was not actionable).[20] Such a distinction where questions of honesty are at stake would now be unthinkable. One hundred years later, by Lord Holt's time, an affirmation of title was equivalent to a warranty; now a warranty is implied from the sale. It is not so much the change of rule that matters, but the change in underlying expectations (or not, as the case may be) of honesty and fairness in social and commercial dealings that is important. Such expectations inform principles of commercial behavior that govern and help construct the terms of rules. Ames cites[21] a case in about 1604[22] concerning an action on the case about the sale of a jewel by a goldsmith who stated that a stone was a bezar-stone, when it was not. All justices and Barons (except Anderson CJ) said that:

[T]he bare affirmation that it was a bezar-stone, without warranting it to be so, is no cause of action: and although he knew it to be no bezar-stone, it is not material; for everyone in selling his wares will affirm that his wares are good, or the house which he sells is sound; yet if he does not warrant them to be so, it is no cause of action, and the warranty ought to be made at the same time of the sale;…

(Emphasis added)

Anderson CJ in dissent held that:

"[F]or the deceit in selling it for a bezar, whereas it was not so, is cause of action."

17   In Derry v Peek[23] the contemporary correctness of the rule as expressed by the majority (not the accuracy of the report) was questioned. Nevertheless, that such could be expressed by so many judges in one case reflects what we today would describe as an attenuated influence of honesty in commercial life that should inform how rules in commerce are articulated and enforced. Nowadays, traders are not permitted to mislead or deceive in describing the quality of their wares.

18   Another part of the balance between principle and rule is that sometimes a sensible, simple rule can only be expressed coherently and without complexity by a generally expressed norm. The rule "easily learned and easily retained"[24] is often one based around some norm such as reasonableness or honesty that is formulated to accord with the expectations of honest and reasonable commercial participants. No better example of this can be seen in the contracts that govern the international shipping industry. They are concise, well-drawn documents, often prepared by industry groups. The standard forms that form the basis of countless daily commercial exchanges, often between strangers, are expressed in terms of values and norms accessible to, and known by, commercial people in the industry. Examples are: "thoroughly efficient state",[25] "due dispatch",[26] "all customary assistance",[27] "suitable" and "unsuitable",[28] "safe dock [or] place".[29] Though these kinds of words may lack an apparent element of morality, they do all contain judgment and evaluation premised on reasonable performance satisfactory to an honest person familiar with the business of shipping. The broad general rule is informed by common understanding and expectation and knowledgeable dispute resolution, usually by skilled arbitrators. Reasonable evaluation is made comfortable by the stable, well-known values that inform the exercise.

19   Commerce is a central concern of most societies, all sophisticated societies. It is an activity in which people seek to use talent, skill, opportunity, luck, knowledge, position and power to enter exchanges with others for the gaining of income, profit, advantage or wealth. It is carried on in a huge variety of contexts: from international to domestic, by organisations of vast size with huge power, to medium and small enterprises, and individuals, who are sometimes vulnerable. How the law reacts to the commercial problem at hand should depend on the commercial context. That context will include the common characteristics of the group, its milieu and its practical demands and social norms. No better place to see that is in the customarily clear prose of Lord Diplock in Schroeder Music Publishing Co v Macauley,[30] in a passage to which I will return.

20   To a significant degree, commerce is self-interested; but, to be effective, it is relational and built on a human communing in which power and influence is not always equal. Individuals and groups in society, as well as the society or polity itself, then have interests: as to how power is exercised, as to the place of human freedoms and fundamental rights and the place of human dignity. These are broad social and political questions, with which the law has daily contact. A recognition of these matters explains the legitimacy of the involvement of parliaments in such questions. Further, self-interest is one thing, but some contracts, especially those of a relational character, will require trust and co-operation to succeed. Self-interest does not dictate hard-faced selfishness.

21   There is a significant degree of self-protection for, and self-interest in, society and the commercial community in recognising the need for protection of those vulnerable to an entity's economic exploitation of assets. It is a public recognition of the need for sustainable honest commerce. It reflects the internalised notions of good faith in commerce. These considerations are a necessary self-protecting aspect of commerce; without them, industry and commerce risk characterisation as potentially predatory and exploitative, and, as such, deserving of treatment accordingly.

22   How a society or a legal system regulates industry and commerce is a question of the utmost importance. It is of importance for a number of reasons, not the least of which is that industry and commerce create wealth and employment in society. How that wealth is created and distributed, and how people are treated in their employment and in their contact, in society, with industry and commerce, is a necessary inquiry before conclusions can be drawn about the worth of wealth creation through industry and commerce. We do not, as a society, see any benefit in wealth creation by slavery, drug or people trafficking, even if the "assets" deployed are in other countries, and even if the activity is not directly or immediately physically hurting citizens of this country. Those, of course, are extreme examples. But they arise in the daily life of people in some societies. The question whether to work for a murderous criminal gang as an alternative to starvation of one's family is a rule of law question, as well as a human dilemma.

23   That wise and learned commercial judge, Lord Devlin, said that the law should facilitate and not hinder commerce.[31] That is so, but there are some assumptions involved in the proposition. It is honest commerce that is to be facilitated; dishonest commerce is to be hindered. The norms that will bear upon the answer to whether an activity should be facilitated or hindered are the values we bring to our rule making and rule application in commercial law. Thus, there will be attitudes and practices in commerce that will be the subject of disapproval, control and correction by the state through statute and legal rule: examples are dishonesty, duress, oppressive use of power and market domination. Why, for instance, should fraud not be discouraged by the ability to bargain for a penalty?

24   This leads to large questions: What are the fundamental values and norms that underpin commerce? What are the sources of their existence? What is the content of their manifestation in legal rules and principles? Even when Parliament has spoken and the process is one of statutory interpretation, the words of the statute must be read, not as a mechanical exercise, but with a recognition of their social context. This is especially so when the words themselves denote moral values: unconscionable, unjust, unconscientious, in good faith, honestly, reasonably, and misleading or deceptive.

25   We should accept that any system of law worthy of being called just must be founded on fundamental values; part of that acceptance is the recognition that sometimes rules can only be expressed by reference to values or general concepts and cannot (unless incoherence is to be courted) be reduced to concrete, inabstract propositions. We live with this every day; we are familiar and comfortable with rules that lack case specific precision, but which have meaningful content and which provide for acceptable, if contestable, application: e.g., the common sense and evaluative conclusion of causation; the requirement of subjective and objective honesty; the requirement of a reasonable time for conduct in all the circumstances in various situations such as contract; the expectation of a reasonable response to risk created by one's own conduct when concepts of duty of care are examined. Essential to our being comfortable with these rules expressed by reference to values or general concepts is the existence of a stable contextual framework and a relevantly organised body of values (explicit or implicit) for the resolution of the question. For instance, today, at least, we do not have to agonise over the legitimacy of the moral basis for, and content of, a rule that forbids, and provides a remedy in respect of, deliberate deception or fraud, or lying or stealing. Here, law and morality coincide and form a unitary standard: law is morality; morality is law.

26   Our conception of the bargain has taken us (depending upon the jurisdiction) to the point of acceptance of implications into the binding contractual fabric of requirements of a reasonable degree of good faith in support of the bargain made as the subject of free will. The bargain is the tool of human interaction, not just commerce. Its binding force lies in the rooted concept of the promise, the faithfulness to one's word, and the place of trust in the building of human social relationships and structures including those in commerce. The bargain is not a creature of Benthamite philosophy or laissez-faire free market philosophy. It inheres in human conduct. That the King's courts did not enforce executory contracts before the 17th century did not mean that merchants' courts did not.[32]

27   The moral roots of the binding character of the bargain also breathe life into the other evaluative considerations, principles and rules that surround the bargain: the rules of construction and implication that smooth and mould the content of the bargain to its reasonably intended purpose; the rules and principles of addressing injustice in the bargain: non est factum, rescission for mistake or misrepresentation, frustration and its consequences, unconscionability, undue influence, and estoppel.

28   Equity's fundamental role in the English legal system was the expression of principles and rules that were based on, and expressed in terms of, moral values and expectations of behaviour. The conscience of a party was the subject of scrutiny, by reference to human conduct and the circumstances of fraud, mistake, surprise, oppression and vulnerability. Equity may have not mended a man's bad bargain, but that 19th century aloofness was predicated upon an absence of a vitiating circumstance recognised by Equity to justify intervention.

29   The spirit of Equity lay in the creative tension in, and the dialectical creation of energy by, the reconciliation of the search for rules and predictability (including certainty) and the vindication of values, morality and justice.

30   How does commerce work? What is essential to it? Two answers are trust and honesty: not to perfection, but to the requisite degree in the circumstances. This is not to dream of a perfect world; nor is it to say that every business person is trustworthy and honest; but commerce cannot work if every risk of trickery is to be attended by a strategy, whether legal or social, for mitigation. Honesty and trust and a fidelity or faithfulness to a bargain reduce the time and expense of legal documentation and facilitate the speedy and fair conduct of business relationships. To a significant degree, a system that requires or expects its participants to behave in a trustworthy and honest way, showing a substantial fidelity to a bargain struck, will engender certainty, not uncertainty, by lowering risk, and by not demanding that every contingency of risk be provided for in writing.

31   Certainty is rarely, if ever, the product of intricate sharply drawn rules. Prolix rule making, not necessarily based on a reflection of honest common-sense and of the reasonable expectation of honest people, is likely to engender as much uncertainty as certainty.

32   Let us now, as Professor Dawson once put it,[33] climb part way down the mountain and take a closer look at the underbrush in which most of us spend our time.

33   Let us look at contractual good faith. It is a topic that has been discussed at length in Australian and elsewhere.[34] Paul Finn has been at the forefront of that discussion.[35] It is, as Paul Finn has often said, better expressed as fair dealing; but I will use the phrase "good faith" because the cases do.

34   One of the difficulties in discussing the place of good faith in Australian contract law is the lack of recognition of its existing place (albeit embedded and disguised) in the law; the feeling or assertion that it is something foreign (civilian), new and intrinsically uncertain and too closely linked to equitable notions of lack of conscience that are foreign to the common law of contract. Even worse than the sin of introduction of foreign ideas, is the potential fusion of law and equity. Related to these perceived problems is the confusion of the analytical and legal technique for the recognition and employment of the principle.

35   Some of these concerns represent misconceptions and some point in the direction of weaknesses in our contract law, which an over-emboldened notion of good faith will not remedy, indeed, may exacerbate. Some of these considerations about the place of good faith were adverted to by Finn J in GEC Marconi Systems v BHP Information Technology Pty Ltd.[36]

36   One of the difficulties, as adverted to by Professor Peden[37] and Finn J in GEC Marconi,[38] is the inadequacy of the technique of the implied term to vindicate good faith.

37   Let me begin by stating four propositions as hypotheses which I will discuss before moving to the closely related, but perhaps distinct, topic of conscience.

38   First, the place of good faith or fair dealing can be seen as an informing or organising principle around, or presently binding duty within, the formed bargain, not as a separate and distinct implied term, capable of sounding in damages. It is a principle or duty that forms the framework or the context of the contract, or to which the parties are bound. Within that context or framework the contract is interpreted, terms are implied and performance is evaluated. Secondly, its content is honest fair dealing assessed by reference to the context and nature of the arrangement, which will often include a degree of commercial self-interest; it is not the subjection of one's interests to a fiduciary or representational duty, or to a duty of loyalty, to another. The loyalty is to the bargain struck and the promise made. Thirdly, it is not new; it has inhered in our law of contract and obligations for a very long time, at least as an unstated informing norm. Fourthly, and related to the second proposition, if too much content is sought to be given to good faith beyond honest fair dealing by reference to the content of the contract as agreed in its context, such as by reference to inequality of bargaining power and consequent hardship, oppression and unconscionability, its utility as a coherent organising principle or duty referable to the bargain as made, may diminish. Such questions are better dealt with by the law's response to oppression and unconscionability of bargains reached. That is the interface between good faith or fair dealing, and conscience.

39   The greater clarity with which good faith is expressed in civilian systems (as opposed to English contract law) can be accepted. In a Scottish appeal in 1997,[39] Lord Clyde referred to (in Scots law) "the broad principle in the field of contract law of fair dealing in good faith." But in England, at least until recently, the preferred approach has been the rejection of a commitment to over-arching principle.[40] Recently, there are signs that in the core commercial area of maritime chartering that a duty to co-operate and a duty of good faith are being expressed by London commercial judges, especially by Mr Justice Leggatt.[41]

40   The role of good faith in a system such as Scotland is as an underlying (but binding) principle of an explanatory and legitimating nature, not as a principle of an active or creative nature. It does not enlarge the bargain, it assists in giving content to the bargain and thus controlling performance.[42] It is a (binding) informing norm or organizing principle. The principle plays the same role in public international law.[43]

41   One should not be loose with one's terminology. The expression of the matter by Lord Clyde in 1997, and as explained by Lord Hope in 2004,[44] was as to an explanatory and legitimating principle having a source in Roman law:[45]

But…good faith in Scottish contract law, as in South African law, is generally an underlying principle of an explanatory and legitimating rather than an active or creative nature:…That was so in Roman law, which distinguished between obligations bonae fidei judicia:…It was a distinction which applied properly to the remedy, rather than to the obligation. It was not a source of obligation in itself. That remains generally true today in the civilian systems, which recognise the principle.

(citations omitted)

42   Nevertheless, one does not need to resort to Roman law for the identification of an organising or informing principle. I have already referred, in this context, to unjust enrichment. Nor is the common law unable to recognise an informing principle as a duty and binding as an expected norm of behavior without vindicating it through a separate free-standing obligation.

43   Recently, the Supreme Court of Canada[46] has recognised good faith as an "organising principle"; that is, a requirement of justice from which more specific legal doctrines may be derived. It is not a free-standing term but a standard that underlies more specific legal doctrines and is context specific[47].

44   Let me turn to the United States, and in particular, to a common law jurisdiction of great commercial influence, New York, where one can see the duty used in the way described above. I do not presume to survey or summarise American law (if there be such a thing). Rather, from some of the great courts and legal sources of the Republic, I wish to display what may be seen to be at the core of Australian law. The great challenge of distilling general law from the United States' experience is, of course, the lack of a national final court of appeal and the rejection in 1938 in Erie Railroad v Tompkins[48] of the existence of a national general law in federal diversity jurisdiction that had been opened up in 1842 in Swift v Tyson.[49] With the exception of the separate existence of the law maritime as a federal common law,[50] there is no such thing as United States' common law and no United States' contract law. Hence the need for "soft" law such as the Restatements of the American Law Institute and the Uniform Commercial Code.

45   Before referring to the great harmonising declaration of American "soft" commercial law – the Uniform Commercial Code and the Restatement of Contracts – I will say something about some seminal American judgments.

46   In 1984, in Tymshare Inc v Covell[51] the then Judge Scalia of the District of Columbia Circuit said that the "modern doctrine" of the "obligation to perform in good faith" was "simply a rechristening of fundamental principles of contract law well established."[52] He expressed, with customary astringency, a distaste for the broader expression of the matter according to modern taste by reference to morality and public policy. He was warning (and legitimately so) against overblown expression creating overblown principle. He saw the objective of honouring the reasonable expectations of contracting parties as achieved by the function of implication and interpretation based on reasonably fulfilling the bargain. He gave as an example the effective, elegant implication by the New York Court of Appeals in 1917 in Wood v Lucy, Lady Duff-Gordon.[53]

47   That case is worthy of a moment's reflection, not least to savour the elegance of the language of Judge Scott in the Appeal Division of New York in McCall Co v Wright[54] employed by Cardozo J in Wood v Lucy. In language the beauty of which was equaled by its insight, Cardozo Jrested implication on the honest and reasonable expectations of the parties, and the unlikelihood of one being left at the mercy of the other.

48   Lady Duff-Gordon was a self-styled "creator of fashion". Cardozo J explained the dispute very recognisable today in the age of brands:[55]

Her favor helps a sale. Manufacturers of dresses, millinery and like articles are glad to pay for a certificate of her approval. The things which she designs, fabrics, parasols and what not, have a new value in the public mind when issued in her name. She employed the plaintiff to help her to turn this vogue into money. He was to have the exclusive right, subject always to her approval, to place her indorsements on the designs of others. He was also to have the exclusive right to place her own designs on sale, or to license others to market them. In return, she was to have one-half of "all profits and revenues" derived from any contracts he might make. The exclusive right was to last at least one year from April 1, 1915, and thereafter from year to year unless terminated by notice of ninety days. The plaintiff says that he kept the contract on his part, and that the defendant broke it. She placed her indorsement on fabrics, dresses and millinery without his knowledge, and withheld the profits. He sues her for the damages, and the case comes here on demurrer.

49   The agreement was written, elaborate and signed. Lady Duff-Gordon (who had been exploiting her endorsements with others, to the objection of Mr Wood) said there was no contract because Mr Wood had not promised to do anything; there was no promise to use reasonable efforts to further her endorsements and market her designs. Cardozo J, however, said:

We think, however, that such a promise is fairly to be implied. The law has outgrown its primitive stage of formalism when the precise word was the sovereign talisman, and every slip was fatal. It takes a broader view to-day. A promise may be lacking, and yet the whole writing may be "instinct with an obligation," imperfectly expressed [Scott J in McCall Co v Wright]. If that is so, there is a contract.

50   The implication of a duty arose from an examination of the whole agreement. Importantly, Mr Wood's exclusive privilege was to be matched by a duty upon him, to avoid one party (Lady Duff-Gordon) being at the mercy of another (Mr Wood). (One suspects, even from this distance in time, that Lady Duff-Gordon was rarely at the mercy of others.) Business efficacy (Bowen LJ in The Moorcock[56]was cited) demanded the implication. The hint, perhaps no more, from the case is the commercial ease with which implication will be made in order to support the bargain made. No superimposed moral statement was expressed and there was no mention of "good faith" by Cardozo J, just an implication to vindicate the reasonable expectations of honest people. But the doctrine of good faith was well-known in New York law. An examination of its use in a handful of cases reveals its central place, not as a free-standing term of the contract, but as a duty or obligation within the contract used in construction and implication of terms in furtherance of the vindication of the bargain's reasonable performance.

51   In 1886, in Uhrig v The Williamsburg City Fire Insurance Co[57] an insurance policy had an arbitration clause requiring the parties to appoint appraisers who would appoint an umpire. The insurer refused to appoint another appraiser in order to break the deadlock. An implication of such an obligation was made by the Court of Appeals because:

[I]t was the duty of each party to act in good faith to accomplish the appraisement in the way provided in the policy.

52   In 1889, in Doll v Noble[58] the Court of Appeals qualified the contractual power or position of the proprietor to be entirely satisfied with the work done by a builder as one that could not be exercised arbitrarily, unreasonably or in bad faith.

53   In 1903, in New York Central Iron Works Company v United States Radiation Company[59] the Court of Appeals was concerned with an open-ended supply contract. The buyer agreed to deal exclusively in the seller's goods and the seller agreed to supply all goods needed by the buyer. The buyer's demands became commercially uncomfortable for the seller. They were merchants in trade and not speculation. The Court used the obligation of good faith to give content to the express clauses, and not permit the contract to be interpreted, and thus used, beyond its business purposes:

But we do not mean to assert that the plaintiff had the right under the contract to order goods to any amount. Both parties in such a contract are bound to carry it out in a reasonable way. The obligation of good faith and fair dealing towards each other is implied in every contract of this character. The plaintiff could not use the contract for the purpose of speculation in a rising market since that would be a plain abuse of the rights conferred and something like a fraud upon the seller.

[I]t would be competent for the defendant to plead and prove facts to show that the orders were in excess of the plaintiff's reasonable needs and were not justified by he conditions of the business or the customs of the trade. In other words, that the plaintiff was not acting reasonably or in good faith, but using the contract for a purpose not within the contemplation of the parties; that is to say, for speculative as distinguished from regular and ordinary business purposes.

54   In 1905, in Industrial and General Trust Co Ltd v Tod, good faith was also employed in the restriction of an otherwise apparently unrestrained contractual power to affect the rights of the other party, including a contractual power to construe the contract.[60]

55   In 1912, in Patterson v Meyerhofer,[61] the defendant agreed to buy land from the plaintiff at a particular price. Knowing that the plaintiff did not own the land and was intending to buy it at a foreclosure sale, the defendant then bought the land before the sale for a price below what she had agreed to pay the plaintiff. The plaintiff claimed the difference in prices. The trial judge found for the defendant saying there was no relationship of confidence and each party was entitled to act in his and her own interests, restricted only by the stipulations to the contract. The Court of Appeals agreed that there was no trust or fiduciary relationship, but disagreed on what the contract contained. Whilst good faith was not enunciated in such terms, an implication was recognised as being in every contract that each party will not intentionally and purposely do anything to prevent the other party carrying out the agreement on his part.

56   In 1914, in Brassil v Maryland Casualty Co[62] the Court (in the context of a policy of insurance) spoke generally of the obligation to deal fairly and in good faith with the insured.

57   In 1918, in Wigand v Bachmann-Bechtel Brewing Co[63] the Court used the implication of good faith and fair dealing in all contracts in the construction and interpretation of a contract in which a brewer had agreed to sell all the wet brewery grains produced from its brewing and to continue to do so for 5 years. The plaintiff expended large sums building a drying plant to convert the wet grains into dry animal feed. The contract was construed as requiring the brewer to stay in business for the 5 years.

58   In 1933, in Kirke La Shelle Co v Armstrong Co[64] the Court once again used the duty in the construction of the contract, controlling the right of one party by reference to the intended benefit to be gained by the other party to the agreement.

59   The above is the approach of the official commentary to the Uniform Commercial Code [1-304] which is in the following terms:

Every contract or duty within [the UCC] imposes an obligation of good faith in its performance and enforcement.

60   The commentary reads as follows:

This section does not support an independent cause of action for failure to perform or enforce in good faith. Rather, this section means that a failure to perform or enforce, in good faith, a specific duty or obligation under the contract, constitutes a breach of that contract or makes unavailable, under the particular circumstances, a remedial right or power. This distinction makes it clear that the doctrine of good faith merely directs a court towards interpreting contracts within the commercial context in which they are created, performed, and enforced, and does not create a separate duty of fairness and reasonableness which can be independently breached.

61   The Restatement of the Law (2nd) Contracts at [205] expresses the duty in similar terms to [1-304] of the UCC. The commentary and reporters notes do not, however, restrict themselves to the limited role expounded under the UCC. At first instance in United State Surgical[65] McLelland J, however, accepted the evidence of Judge Breitel as to the interpretation of [205] of the Restatement under New York law that conformed to the expression of the matter in the UCC, and expressed the view that this did not diverge from Australian law. There is a strong view in some courts in the United States that a role closely focused on the agreement is the doctrine's utility. This can be seen in the opinion of Judge Posner in Market Street Associates Limited Partnership v Frey.[66]  If I may respectfully say, this is a hugely rewarding judgment to read for any contract lawyer in the common law tradition. Posner J first warned against the morally directed content of the phrase confusing contractual obligation with fiduciary obligation. Secondly, he rejected that the duty supported a freestanding obligation of pre-contractual candour or disclosure. Thirdly, he noted that after formation the party is not required to be an altruist and loosen obligations when the other gets into trouble; but he did distinguish this from sharp practice by taking deliberate advantage of an oversight by the other about its rights. This is akin to theft and if it be permitted by the law, the production of over-elaborate contracts will be necessitated. Once the contract is made the situation changes and a modicum of trust, co-operation and honesty is required – but (and this is what is essential to grasp) in furtherance of the bargain.

62   Judge Posner rooted the obligation in the agreement of the parties. He emphasised that contracts come in different forms and for different purposes. Some allocate risks in the participation in markets, some are concerned with family or social relationships, some are to regulate further co-operative adventures. He said that the office of good faith was to forbid opportunistic behavior that would take advantage of the position of the other in a way uncontemplated by the bargain and contrary to the substance of the bargain; thus, inferentially, to support the bargain as properly construed.

63   He said memorably[67]:

The contractual duty of good faith is thus not some newfangled bit of welfare-state paternalism orthe sediment of an altruistic strain in contract law, and we are therefore not surprised to find the essentials of the modern doctrine well established

in nineteenth-century cases…

64   This brief examination of United States' authority reveals two things: first, the technique of application or operation of the principle, not as a free-standing term, but as an inhering duty or obligation; and secondly, the content of the phrase – honest and reasonable fair dealing in support of the bargain made.

65   As to the first matter, it should not be assumed that all United States' cases eschew the technique of a free-standing term.[68] As to the second matter, it is important to appreciate that the obligation is not limited by subjective honesty, it incorporates a notion of reasonable fair dealing. But that objective standard is directly linked to the bargain struck between the parties in the context in which it was made. This was Judge Posner's point. Good faith in a market based risk allocation contract will be satisfied by nothing less than timeous and precise performance. Good faith in a long term supply contract may require the parties reasonably to co-operate to support the working of the contract. What the contractual principle does not require is the sacrificing of one's own interests as if one owed a duty of loyalty or fidelity to the other party. The fidelity is to the bargain through reasonable fair dealing in supporting the reasonable expectation of the parties.

66   The content of good faith as stable and contractually certain, and framed by reference to the bargain as struck, has been decided in a number of cases in Australia, in particular in the New South Wales Court of Appeal.[69] What has not been dealt with coherently in Australia is the legal technique for operation of the duty or principle.

67   An examination of the reasons for judgment of Priestley JA in Renard Constructions[70] reveals that he used good faith as a duty and expected standard, not as a stand-alone implied term. Following Renard Constructions there has been an increasing number of appellate and first instance decisions considering the incorporation of good faith and fair dealing within Australian contract law. Each state appellate court has, however, taken a slightly different stance as to the status and content of the duty, leading to a degree of division and uncertainty. This disunity has been further complicated by the fact that the High Court, despite being given the occasion on at least two occasions to say something of the status of good faith, has declined to do so.[71] Put generally, both New South Wales and South Australia have, for the most part, accepted the existence of a duty of good faith and have held that such a duty may generally be implied into every commercial contract.[72] In contrast, in Victoria, Tasmania, and the Australian Capital Territory the courts have rejected such a submission and have instead held that the ordinary principles for the factual implication of contractual terms must first be satisfied before the requirement of good faith will be imposed.[73] Meanwhile in Western Australia and Queensland the courts have declined to express a concluded opinion on the matter, in light of the absence of High Court authority.[74] The Courts in the Northern Territory have not yet had the occasion to consider the matter. The Full Court of the Federal Court recently discussed good faith in a manner conformable with it being a general implication or feature of Australian contract law attending to the performance of the bargain and dealt with its construction and implied content in the way reflected in Priestley JA's judgment in Renard and Posner J's judgment in Market Street Associates.[75]

68   The most crucial distinction to be drawn out is between the recognition of good faith as being an independent implied term of the disputed contract, and the recognition of good faith as being an implied duty or principle, in the sense that it becomes part of the "orthodox techniques of solving contractual disputes" [76] and is applicable to the performance and enforcement of all contracts and dealings.[77] Whilst the content and meaning of the phrase "good faith" may be the same in both scenarios (to act honestly and with a fidelity to the bargain; and to act reasonably and fairly in dealings),[78] the implications and connotations are fundamentally different. If good faith is simply a term implied in fact (which can itself be construed and applied, and found a separate head of damages), then the concern of various courts as to whether the principles of BP Refinery have been satisfied, or whether "entire agreement" clauses operate to the exclusion of good faith, can be understood. If however good faith is recognised as an informing but binding principle or duty – a means by which the courts can recognise and give effect to an expected standard of behaviour (linked, but not limited, to honesty) – then there is no debate as to whether or not the principle is applicable; it is simply a basic assumption of all contractual dealings.[79] It is this latter understanding of good faith that reflects the Scottish and United States' approaches discussed earlier. However in Australia the majority of case law on good faith appears to have focused on the first understanding. This difficulty was highlighted by Finn J in his decision of GEC Marconi where he noted that in Australia there was "uncertainty about the very purpose of the duty itself in regulating contractual behaviour" and that, for the most part, Australian legal doctrine on good faith had characterised good faith as an implied term, capable of being excluded by express or by inconsistent provisions, rather than as a legal standard that underpins the bargain.[80] It will be necessary to address this fundamental distinction before any unity in Australian contract law on good faith or fair dealing can be achieved.

69   It is, however, helpful to remind oneself of what is already embedded in our contract law. If one can find instances of rules that have necessarily underlying them a conception of fair dealing and co-operation, one is a long way along the path of recognising the present existence of good faith in Australian law, at least as an organising principle. After all, even hardened sceptics would accept honesty as a binding contractual norm infusing every contract, without the need to resort to BP Westernport,[81]The Moorcock[82]or Liverpool City Council.[83] 

70   Australian contract and commercial law is littered with propositions, rules and implications that give effect to the elements of a duty of good faith and fair dealing. Examples are: the implied engagement to do nothing to put an end to the circumstances by which the contract can take effect;[84] the implied agreement to do all that is necessary to be done for the carrying out of what has been agreed;[85] the implication that each party will do all things necessary on his part to enable the other to have the benefit of the bargain;[86] and the construction of every express promise as containing a negative covenant not to hinder or prevent fulfilment of the express covenant.[87] The first implication of Cockburn CJ in Stirling v Maitland was used to construe an express clause, as was that of Lord Blackburn in the second in Mackay v Dick (which was drawn out of "obvious good sense and justice"[88]), as was the fourth of Dixon J in Shepherd v Felt & Textiles.[89] Other examples include: the implied obligation to act honestly and reasonably in exercising a right to rescind a contract unless satisfied with finance;[90] the limitation of clauses in a building contract as to satisfaction of a state of affairs to a reasonable construction meaning only what is reasonable and just;[91] the limitation of a clause giving absolute discretion to remove work from a contract to what is reasonable;[92] the limitation of a right to rescind a sale of land if unable or unwilling to comply with or remove an objection by the purchaser to what was not unconscionable[93] or not arbitrary or unreasonable.[94] All these propositions echo the expression of the matter in the New York cases to which I have referred.

71   Does it all come down to language? Is it already there? McLelland J in United States Surgical[95] identified the law of New York in [205] of the Restatement of Contracts 2d as not divergent from the common law in New South Wales. In 1993[96] in an important judgment, Gummow J examined what he saw as the different course of Anglo-Australian and United States doctrine concerning good faith. His Honour was dealing with an argument about implied terms. The difference he saw in the US case law may be perhaps avoided if the principle to be derived from cases such as Brassil[97], Wigand[98] and Kirke La Shelle[99] is to be seen as only expressing the organising principle or duty by reference to which the proper construction or implication is made, rather than as implying a free-standing term (as was being argued before Gummow J).

72   Is it worth saying then that an obligation of good faith or fair dealing exists, as an informing norm, but not as a separate implied term? Yes, because it does. That is what explains the constructions and implications that are articulated in cases such as Butt v McDonald[100] and Shepherd v Felt & Textiles. [101] Yes, because it denies the proposition to any observer of our law that our law is devoid of underpinning principles of fairness. Yes, because it can then be used to prevent the confusion and difficulty in the implication of stand-alone terms of good faith. Yes, because it will give a more likely satisfactory approach to implication and construction of contractual terms.

73   There is importance in the legal technique employed. If the term must be implied as a free-standing obligation, it must mean that without the implication, the duty is absent from the contract. The arguments about business efficiency and consistency with other contractual terms take place in a framework of insertion of a term and the contract not otherwise being imbued with any honest fair dealing. This approach might see a clause not implied because the contract can "work" in some fashion, presumably surrounded by sharp practice (that could (should?) have been anticipated and provided for by an additional written term). This approach also leaves one puzzled in the search for the principled basis of the construction and implication in such cases as Butt v McDonald[102], and Shepherd v Felt & Textiles.[103] It is inadequate to say that they arise from the contract. There is plainly a normative impulse.

74   On the other hand, if the processes of construction, interpretation and implication assume such a standard, the bargain is to be construed, interpreted and supported by, and business necessity includes, the need for the contract to work in a way that conforms to that standard.

75   I earlier referred to the danger of seeking to pack too much into good faith. By that, I was not attempting to limit its content to subjective honesty; it reaches to reasonable fair dealing. But it is a doctrine that is in support of the contract as struck. If one has a contract made through inequality of bargaining power, oppressive conduct or other vulnerability, good faith may not be the vehicle or technique for the vindication of the weaker party, if the law is to provide for such a circumstance. For instance, some franchise agreements may be very lopsided and clearly designed to favour the franchisor, perhaps oppressively. Honesty and fair dealing in the construction, interpretation, implication and performance of that contract may require the contract to be construed so as not to see one party at the mercy of the other, for example to have a power construed as required to be exercised non-arbitrarily or reasonably. But construction and implication may not deal with the oppressive or unconscionable nature of the bargain struck. To seek to have the principle of good faith or fair dealing do so would introduce an element into the doctrine that acts against, not in furtherance of, the bargain as struck. It is a different, though related, doctrine that must remedy the consequences of unconscionable oppression, whether in the making of the bargain, or otherwise acting outside the bargain, in a way that is to be seen as illegitimate. There may of course be an overlap. The utilisation by the stronger party of a term introduced by inequality of bargaining power against the weaker party might give the opportunity for the economic destruction of the latter. Whether the term ought be allowed to be so used conformably with good faith fidelity to the bargain may depend on its content and on its relationship with the aims of the contract. It might be expressly open for use. That, however, may not constrain a related doctrine as to the unconscionable use of rights. In another case the stronger party might simply demand tribute for the full benefit of the contract to be given: "I know I have agreed to buy your health food bars to sell in my supermarket, but unless you give me $50,000 in cash I will place them on the bottom shelf underneath the pet food and next to the garden fertiliser." That may be seen as both lacking in support of the bargain and to be unconscionable business conduct.

76   One of the difficulties that has dogged the discussion of good faith is that it has been invested with a role and function that goes beyond the notions of honestly and reasonably supporting the bargain struck. Once one invests in the phrase content that constrains the use of bargaining power that was successfully employed in forming the contract, one moves to questions of the unfairness of the bargain as the product of inequality of bargaining power. These may be seen as qualitatively different concepts from honest fair dealing in support of the bargain made. It is this extension of the meaning that Judges Scalia and Posner were speaking against. That is not to say that these concepts should not be the subject of legal principle; plainly they should be, and they are.

77   At this point, these related concepts of fairness, inequality of bargaining power and conscience intrude. These are notions that run through the law: common law, Equity and Admiralty. How they operate in different legal contexts will be always the subject of doctrinal specificity. Common themes need not create unhelpfully vague rules and principles.

78   One might begin with some aspects of the common law. In Macaulay v Schroeder Publishing [104] the House of Lords dealt with the doctrine of restraint of trade in circumstances of a standard form contract of a music publisher imposed on a young composer. The House of Lords (in affirming the Court of Appeal which had affirmed the trial judge) found the agreement against public policy and void. In his speech, Lord Diplock recognized, at least historically, the capacity of the common law, depending on context, to remedy unfair or unconscionable bargains, and the remaining or residual common law jurisdiction in that regard in the doctrines of penalties and restraint of trade being rooted in such considerations. He said the following:[105]

It is, in my view, salutary to acknowledge that in refusing to enforce provisions of a contract whereby one party agrees for the benefit of the other party to exploit or to refrain from exploiting his own earning power, the public policy which the court is implementing is not some 19th-century economic theory about the benefit to the general public of freedom of trade, but the protection of those whose bargaining power is weak against being forced by those whose bargaining power is stronger to enter into bargains that are unconscionable. Under the influence of Bentham and of laissez-faire the courts in the 19th century abandoned the practice of applying the public policy against unconscionable bargains to contracts generally, as they had formerly done to any contract considered to be usurious; but the policy survived in its application to penalty clauses and to relief against forfeiture and also to the special category of contracts in restraint of trade. If one looks at the reasoning of 19th-century judges in cases about contracts in restraint of trade one finds lip service paid to current economic theories, but if one looks at what they said in the light of what they did, one finds that they struck down a bargain if they thought it was unconscionable as between the parties to it and upheld it if they thought that it was not.

So I would hold that the question to be answered as respects a contract in restraint of trade of the kind with which this appeal is concerned is: "Was the bargain fair?" The test of fairness is, no doubt, whether the restrictions are both reasonably necessary for the protection of the legitimate interests of the promisee and commensurate with the benefits secured to the promisor under the contract. For the purpose of this test all the provisions of the contract must be taken into consideration.

79   That passage reflects that the common law has the capacity to develop and mould principles and doctrine that operate upon an assessment of the legitimacy of the exercise of power, the protection of the weak and the restraint of conduct that is unconscionable. It lived more generally before the 19th century; it survives in contracts in restraint of trade and penalties. That the context is commercial is no bar; the doctrines of penalties and restraint of trade work there.

80   Broad notions of fairness also survive to this day in maritime law. The separate sources and roots of maritime law are sometimes forgotten. The fusion attempted by Lord Diplock in United Scientific v Burnley Council[106] was aimed not just as Equity, but Admiralty also.  The different rules in shipping cases, whether about such things as interest[107] or contributory negligence[108] were not anomalies of the common law, they were manifestations of the existence of a separate body of law. Take the law of salvage. It is now viewed as a branch of unjust enrichment. That is uncontroversial, at one level of abstraction, as long as one understands the limits of that paradigm. English salvage law (as distinct from civilian law which was restricted to assistance, or remuneration for services) was focused on reward for success. Further, whilst the obligations of the parties in respect of salvage were often founded in contract, but the contract was subject to close control by the Court. It would be enforced only if "consistent with equity"[109]. Maritime law recognised the importance of the bargain between competent persons; but it provided for a power in the court to set aside or reform bargains that were on inequitable terms.[110]

81   Conscience and unconsionability are pervading considerations in Equity. Conscience was the focus of the operation of Equity acting in personam. Unconscionability in Equity is to be understood from two perspectives: first, unconscionable conduct as the basis for setting aside or refusing to enforce transactions or contracts entered into in certain circumstances, having at its root the protection of the vulnerable from the strong; secondly, as a thematic feature of equity, central to its character, reflecting a standard exacted of parties, often in commercial law in various contexts: such as discretionary defences to specific performance, promissory and equitable estoppel, mistake, breach of confidence, and constructive trusts.

82   Unconscionability plays a role in the assessment of the injustice or not of the retention of a benefit in unjust enrichment.[111]

83   There was nothing that would have prevented the courts developing the general law (whether common law or equity) in a manner that, with prudence and care for the bargain fairly reached, recognised a value or norm of rejection of unfairness or oppression to the requisite degree in some contractual relationships. That would have provided a sounder, more risk free environment both for what are labelled consumer contracts or business to business contracts. Such would not necessarily have reflected some "new-fangled bit of welfare state paternalism"[112] but an underpinning norm of behavior to support commerce.

84   We have lived with penalties in commerce for centuries. The doctrine of penalties is based on unconscionability, and the law and Equity setting their face against unconscionable overcompensation. The doctrine grew out of the recognition in commercial contracts of the effects of inequality of bargaining power and from fairly regulating commerce built on bonds and conditions before the enforcement of executory contracts in the 17th century. The tool thus was there in the modern law for the adaption and development of a cognate idea. Unconscionability by the exercise of power could have been moulded and developed, together with its cousin, relief against forfeiture, to found a rule of unconscionability that was not (as is the modern law of penalties) directed to invalidating commercial clauses at their inception as penal, irrespective of the existence or not of inequality of bargaining power, but to examining whether the operation and enforcement of a clause was unconscionable. Professor Rossiter in his valuable monograph on penalties and forfeiture made this suggestion over 20 years ago.[113] In 1992, in PC Developments v Revell[114] Mahoney JA adverted to this approach.[115]

85   The High Court in the most recent penalties case, Andrews[116] did not move the primary point of focus of the law of penalties from the contract as made, although it did, by reasserting the role for Equity beyond what had been incorrectly taken[117] as the exclusive role of the common law, introduce a degree of remedial flexibility to the operation of the doctrine.

86   One is, however, left with the following. First, the doctrines of penalties and relief against forfeiture, having become separated, do not complement each other. Secondly, the doctrine of penalties rests on an equity derived from overcompensation.[118] Yet that overcompensation may, for instance, come from a clause in a fiduciary contract that all profits derived from a nominated breach (of contract and fiduciary duty) be disgorged, irrespective of loss. Overcompensation cannot be the sole gauge – an evaluative role for unconscionability would save such a contract. But what if overcompensation is the product of a fair commercial bargain struck otherwise than in a fiduciary context? What is wrong with a little commercial incentive to comply with one's contract, if the circumstances of the bargain do not bespeak unconscionable behavior? Or, as one of the appeal judges put it in argument in Interstar: What is wrong with a clause in terrorem that is directed to discouraging fraudulent conduct? The business with which Interstar was concerned, that of finding borrowers for the mortgage loan books of others for a commission, was notoriously rife with fraud and malpractice. Such was central to the ills of purveyors of collateralised instruments leading up to the GFC. More than a little encouragement to behave might be a fair aspect of such a bargain and also accord with a perceived public policy. If the clause were to be abused, this could be dealt with at the point of performance. Thirdly, the lack of a coherent recognition of the place of good faith in Australian contract law has divided and complicated the law. Fourthly, the law (whether common law or equity) has failed to develop a coherent and flexible response to unfair and unconscionable use of bargaining power, beyond the taking advantage of a special disability.[119]

87   In the absence of the courts framing a body of principle to deal more generally with the demands of consumer and business fairness, State, Territory and the Commonwealth Parliaments have intervened. The 1980s and 1990s saw the growth of, often voluminous, consumer legislation. This is not the place to discuss that history. It suffices to say that by the first decade of this century, various reports[120] looked at the limitations of the Trade Practices Act; what was seen as the uncertain judicial interpretations of provisions such as s 51A and the provision of Part IVA of that Act, and the weaknesses of industry specific arrangements (such as in codes). That said, little criticism can be made of the careful development of the consistent and robust jurisprudence of the New South Wales Court of Appeal dealing with the Contracts Review Act 1980 (NSW).

88   Most relevant are the changes made to the now Competition and Consumer Act 2010 (Cth) involving the drawing together, from the Trade Practices Act, of provisions dealing with unconscionability in the unwritten law (Equity) and under statute. In Pt 2-2, ss 20-22A of the Australian Consumer Law, dealing with the supply and possible supply of goods and services (and relevant equivalent provisions in the Australian Securities and Investments Commission Act 2001 (Cth) concerning financial services), a standard of an Australian business conscience has been introduced. The legislation in Part 2-3 also deals with "unfair contract terms" in consumer contracts.

89   I wish only to direct some remarks to Part 2-2, ss 20 to 22. They take their place, of course, after s 18 (formerly s 52: the prohibition on misleading or deceptive conduct) and s 4 (formerly s 51A: misleading representation with respect to future matters). The impact of s 18 over the years has been enormous. It was and is a provision (like ss 20-22) that did not provide a rule to govern particular situations of fact, but was a starting point for legal reasoning. It has embedded a norm in the commercial community that requires the disavowal of trickery or sharp practice. Rarely will such not infringe the prohibition upon conduct which is likely to mislead or deceive. To the extent that our law has lacked a coherent doctrine of good faith, that position has been in part remedied by s 18 (as has s 52), bolstered by s 4 (as has s 51A).

90   Legislation such as Part 2-2 of the Australian Consumer Law offers the courts, in effect, a fresh start to develop a coherent body of principle concerned with fair dealing, conscience and commerce. Statute, not constrained by the need for interstitial growth and historical continuity, can branch out and declare a new standard and set out guides to its content. It will be important to recognise the nature of the judicial task involved in the development of the principle and content of the statutory standard. It is, first, a matter of statutory interpretation and application. That process is, however, not one limited to choice of synonyms and distilled epitomes. It will not be helpful to seek to reduce the judicial method described in Jenyns to a catchword, a phrase, a necessary precondition (such as "moral obloquy" or "moral obliquity" or "a predatory state of mind"). Unconscionability is by force of statute moved into the commercial world. It is the setting of a standard in Australian industry and commerce of a form of decent behavior, by prohibiting conduct of a proscribed standard. It involves characterisation of conduct as against conscience. It is a process of the kind discussed by Dixon and Evatt JJ in A-G (NSW) v Perpetual Trustee [121] and by Gummow J writing extra-judicially as "the need to accommodate what one might call a socially directed rule, expressed as an abstraction, to the infinite variety of human conduct revealed by the evidence in one case after another."[122] It is the creation of an Australian business conscience. It will necessarily draw from, but is not to be limited by, the equitable roots of the expression. Thus, the standards from time to time expected of people in equity will form part of the system of values against which such value judgments or characterisations are made.

91   The terms of s 22 of the Australian Consumer Law provide guidance as to factors and other values that may attend the judgment. They can be summarised as fairness and equality, ignorance of a party, the risk and worth of the bargain, inequality of bargaining power, good faith and fair dealing. The values coming from the statute (including s22), common law and equity must be organised and applied to a factual context. This will not be a formless void of personal intuition.

92   The working through of what a modern Australian commercial, business or trade conscience contains and requires will take its inspiration and direction from our legal heritage in Equity and the common law, and from modern social and commercial legal values identified by Australian Parliaments and courts. The evaluation of conduct will be made by the judicial technique referred to in Jenyns[123]. It does not involve personal intuitive assertion. It is an evaluation which must be reasoned and enunciated by reference to the values and norms recognised by the text, structure and context of the legislation, and by reference to the legal values of the common law and equity and perceived community values, made against an assessment of all connected circumstances. The evaluation includes a recognition of the deep and abiding requirement of honesty in behaviour; a rejection of trickery or sharp practice; fairness when dealing with consumers; the central importance of the faithful performance of bargains and promises freely made; the protection of those whose vulnerability as to the protection of their own interests places them in a position that calls for a just legal system to respond for their protection, especially from those who would victimise, predate or take advantage; a recognition that inequality of bargaining power can (but not always) be used in a way that is contrary to fair dealing or conscience; the importance of a reasonable degree of certainty in commercial transactions; the reversibility of enrichments unjustly received; the importance of behaviour in a business and consumer context that exhibits good faith and fair dealing; and the conduct of an equitable and certain judicial system that is not a harbour for idiosyncratic or personal moral judgment and exercise of power and discretion based thereon.

93   The variety of considerations that may affect the assessment of unconscionability only reflects the variety and richness of commercial life. It should be emphasised, however, that faithfulness or fidelity to a bargain freely and fairly made should be seen as a central aspect of legal policy and commercial law. It binds commerce; it engenders trust; it is a core element of decency in commerce; and it gives life and content to the other considerations that attend the qualifications to it that focus on whether the bargain was free or fair in its making or enforcement.

94   In any given case, the conclusion as to what is, or is not, against conscience may be contestable. That is inevitable given that the standard is based on a broad expression of values and norms. Thus, any agonised search for definition, for distilled epitome or for shorthand of broad social norms and general principles will lead to disappointment, to a sense of futility, and to the likelihood of error. The evaluation is not a process of deductive reasoning predicated upon the presence or absence of fixed elements or fixed rules. It is an evaluation of business behaviour (conduct in trade or commerce) as to whether it warrants the characterisation of unconscionable, in light of the values and norms recognised by the statute.

95   As Deane J said in Muschinski v Dodds[124], property rights (and the same can be said of jural relations in trade or commerce) should be governed by law, and not some mix of judicial discretion or the subjective views as to who should win based on the formless void of individual moral opinion. The statutory standard does not require this. The notions of conscience, justice and fairness are based on enunciated and organised norms and values, including the organised principles of law and Equity, taken from the legal context of the statutes in question and the words of the statutes themselves. Employing judicial technique involving a close examination of the complete attendant facts and rational justification, the Court must assess and characterise the conduct of an impugned party in trade or commerce against the standard of business conscience, reflecting the values and norms recognised by Parliament to which I have referred.

96   If the statute is not viewed as a foreign intruder, but as Parliament setting a standard of expected community behavior in commerce by building on the principles and values of the common law and Equity, it will necessarily develop the common law and be the foundation for the development of principle by the courts that weaves together the two sources of our law. The movement of parliaments into the field of setting standards of business conduct will inevitably engage the courts in developing the general law by reference to those standards. If people in trade and commerce are to be held accountable for unconscionable behavior, the assessment of which involves considerations of good faith and inequality of bargaining power, coherence in the law is unlikely to be promoted by rejecting the standard of good faith in the Australian common law of contract, at least as an informing norm or organising principle. A statute that sets a standard by reference to a broad normative evaluation may be seen not only as the source of a particular law, but as the source of normative standards more generally applicable. Statutes take their place in the formation and development of the values and standards of society that courts must recognize in their day to day work. It will be necessary in this regard to deal with theoretical issues touching the development of the general law by analogy with statute[125], a task I have not essayed. But the task of giving content to business unconscionability will require a recognition that, to paraphrase the words of O'Connor J in State Oil v Barkat U Khan [126], Parliament expects the courts to give shape to the statute's broad mandate by drawing on the general law's tradition and the values recognized in the statute, and thus to create a jurisprudence of the statute.

97   Whether or not the ideas above withstand scrutiny of others, I could not have written this without many conversations over the years with Paul Finn.


[1] (1979; Clarendon Press, Oxford)

[2] Plato noted that where there is maritime commerce there must be more law; Laws, bk8, 842; Montesquieu said that there were more laws in a trading city: The Spirit of Laws liv.xx, chap 18; Jhering spoke of commerce as a pathfinder: Zweck im Recht, I, 233; see R Pound The Formative Era of American Law (1938; Little Brown) at 11-12

[3] Rudolf von Jhering Law as a Means to an End, as translated by Isaac Husik (1913; Boston Book Company), page 175; Zweck im Recht, I, 233, as quoted in Pound op cit n 2 at 33

[4] B Cardozo, Law and Literature (1931; Harcourt, Brace & Co) at 131-132

[5] J.P. Dawson Unjust Enrichment: A Comparative Analysis (1951; Little Brown and Co, Boston) at 19-20.

[6] (1760) 2 Burr 1005; 97 ER 676

[7] [1914] AC 398

[8] [1913] 1 Ch 127

[9] [1923] 1 KB 504

[10] J.P. Dawson op cit n 5 at 20-21, 26-33

[11] [1953] HCA 2; 90 CLR 103 at 118-119

[12] (1822) 2 Dods 504 at 522; 165 ER 1560 at 1567 (a case in Admiralty it is to be noted: see Paciocco v ANZ [2015] FCAFC 50; 321 ALR 584 at 645-647 [272]-[277])

[13] Dawson op cit n5 at 41-109

[14] Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; 162 CLR 221 at 256-257; ANZ v Westpac [1988] HCA 17; 164 CLR 662 at 673; David Securities v Commonwealth Bank [1992] HCA 48; 175 CLR 353; Roxborough v Rothmans of Pall Mall [2001] HCA 68; 208 CLR 516 at 543-545 [70]-[74]; Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; 230 CLR 89 at 156 [151]; Lumbers v W Cook Builders [2008] HCA 27; 232 CLR 635 at 665 [85]; Equuscorp v Haxton  [2012] HCA 7; 246 CLR 498 at [29]-[30]; though compare Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd [2014] HCA 14; 307 ALR 512 at [78] and the discussion in Mason (2015) 39 Australian Bar Review 284.

[15] Heperu Pty Ltd v Belle [2009] NSWCA 252; 76 NSWLR 230 at 260-268 [127]-[163]

[16] R Pound Interpretation of Legal History (1923; Macmillan Company) at 1-11

[17] Holmes Collected Essays (1967; Hogarth) at 211; Brennan J in Mabo v Queensland (No 2) [1992] HCA 23; 175 CLR 1 at [29], [47] (the fracturing the skeleton reference)

[18] 249 NY 458 (1928)

[19] See the example in Ames "The History of Assumpsit" 2 Harvard Law Review 1 at 3-4 (YB 19 H VI 49 p15).

[20] Ibid at 9-10, and the cases there referred to.

[21] Ibid at 9

[22] Chandelor v Lopus Cro Jac 4; 79 ER 3 at 4

[23] (1889) 14 App Cas at 356-357

[24] Hamilton v Mendes (1761) 2 Burr 1198 at 1214; 97 ER 787 at 795 (Lord Mansfield)

[25] New York Produce Exchange 1993 Time Charter (NYPE 93) (state of the vessel provided)

[26] NYPE 93 cl 8(a) (performance of voyages)

[27] Ibid

[28] NYPE 93 cl 9(b) (bunkers)

[29] NYPE 93 cl 12 (place of berthing)

[30] [1974] 1 WLR 1308 at 1315-1316

[31] Lord Justice Devlin "The Relation Between Commercial Law and Commercial Practice" (1951) 14 Modern Law Review 249

[32] FK Beutel Beutel's Brannan Negotiable Instruments Law (1948; the WN Anderson Company, Cincinnati) at 13ff.

[33] Dawson op cit n 5 at 111

[34] Only a fraction were listed by me at footnote 5 of a paper written in 2010: "Good faith and Australian contract law: A Practical Issue and a Question of Theory and Principle" (2011) 85 Australian Law Journal 341

[35] Writing both judicially: Hughes Aircraft Systems International v Airservices Australia [1997] FCA 558; 76 FCR 151; 146 ALR 1 at 36-42; K&S Freighters Pty Ltd v Linfox Transport (Aust) Pty Ltd [1999] FCA 1325 at [20]-[23]; South Sydney District Rugby League Football Club Ltd v News Ltd & Ors [2000] FCA 1541; 177 ALR 611 at 695-696 [390]-[394], 703-704 [426]-[427]; GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50; 128 FCR 1 at 208-209 [918]-[922]; Pacific Brands Sport and Leisure Pty Ltd v Underworks Pty Ltd [2006] FCAFC 40; 149 FCR 395; 230 ALR 56 at 75 [79], 82 [119]
and extra-judicially (to name a few): "Commerce, the Common Law and Morality" (1989) 17(1) Melbourne University Law Review 87; "Good Faith and Non-Disclosure" in Finn (ed), Essays on Tort, (1989; Law Book Co); "Equity in Contemporary Australian Law" London School of Economics (1990); "Australian developments in common and commercial law" (1990) Journal of Business Law, 265; "Unconscionable Conduct" (1994) 8 Journal of Contract Law 37; "Equity and Commercial Contracts: A Comment" (2001) Australian Mining and Petroleum Law Association Yearbook 414; "Good Faith and Fair Dealing: Australia" (2005) 11 NZ Business Law Quarterly 378; "Common Law Divergences" (2013) 37(2) Melbourne University Law Review 509; "Long term contracts – fiduciary and good faith obligations" (presented at Commercial and Legal Issues under Long Term Contracts Conference on 4 May 2012 at The UWA Club); "Long term contracts – fiduciary and good faith obligations" in Dharmananada, K & Firios, L (eds) Long Term Contracts (2013) Federation Press

[36] [2003] FCA 50; 128 FCR 1 at 208-209 [918]-[920]

[37] Peden "The Meaning of Contractual Good Faith" (2002) 22 Australian Bar Review 235 at 245, referred to by Finn J in GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50; 128 FCR 1 at 208 [918]

[38] 128 FCR 1 at 208 [919]

[39] Smith v Bank of Scotland 1997 SC (HL) 111 at 121B

[40] Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1989] 1 QB 433 at 439

[41] Yam Seng Pte Limited v International Trade Corporation [2013] EWHC 111 [QB] at [119]-[154] per Leggatt J and ST Shipping & Transport Inc. v Kriti Filoxenia Shipping Co SA [2015] EWHC 997 (Comm) Section D and F per Walker J; However at present the status of good faith, as an implied duty or principle, remains uncertain in English law - see Mid Essex Hospital Services NHS Trust v Compass Group UK and Ireland Ltd (t/a Medirest) [2013] EWCA Civ 200 at [97]-[121] (per Jackson LJ; [145]-[146] per Lewison LJ; and [150]-[154] per Beatson LJ); TSG Building Services PLC v South Anglia Housing Limited [2013] EWHC 1151 at [43]-[51] per Akenhead J; Hamsard 3147 Limited v Boots [2013] EWHC 3251 at [81]-[93] per Norris J; Greenclose Limited v National Westminster Bank plc [2014] EWHC 1156 (Ch) at [150]-[151] per Andrews J; Emirates Trading Agency LLC v Prime Mineral Exports Private Ltd [2014] EWHC 2104 at [42]-[64] per Teare J; Bristol Groundschool Limited v Intelligent Data Capture Limited and others [2014] EWHC 2145 (Ch) at [172]-[175], [196] per Richard Spearman QC; Carewatch Care Services Ltd v Focus Caring Services Ltd [2014] EWHC 2313 at [101]-[112] per Henderson J; D&G Cars Limited v Essex Police Authority [2015] EWHC 226 (QB) at [171]-[184] per Dove J; MSC Mediterranean Shipping Company SA v. Cottonex Anstalt [2015] EWHC 283 (Comm) at [94]-[98] per Leggatt J; and Meyers v Kestrel Acquisitions Ltd [2015] EWHC 916 (Ch) at [35]-[42] per Sir William Blackburne

[42] See the discussion by Lord Hope of Craighead in R (European Roma Rights) v Prague Immigration Officer [2004] UKHL 55; [2005] 2 AC 1 at 50-53 [57]-[64]

[43] E.Zoller Good Faith in Public International Law Paris 1977; Nuclear Tests Case (Australia v France) [1974] ICJ Rep 253 at 268

[44] R (European Roma Rights) v Prague Immigration Officers [2005] 2 AC at 50-53

[45] [2005] 2 AC at 51 [60]

[46] Bhasin v Hrynew [2014] 3 SCR 495

[47] Bhasin v Hrynew at [64]

[48] 304 US 64

[49] 41 US (16 Pet) 1

[50] The Lottawanna (1874) 88 US 558 at 572-573, The Osceole (1903) 189 US 158; Southern Pacific Co v Jensen (1917) 244 US 205; Kermarec v Cie General Transatlantique (1959) 358 US 625; Moragne v States Marine Lines Inc (1970) 398 US 375

[51] (1984) 727 F 2d 1145

[52] Ibid at 1152

[53] 222 NY 88; 118 NE 214 (1917)

[54] 133 App Div 62

[55] 222 NY 88 at 90

[56] 14 PD 64 at 68

[57] 101 NY 302; 4 NE 745

[58] 116 NY 230;22 NE 406

[59] 174 NY 331 at 335;66 NE 967 at 968

[60] 180 NY 215; 73 NE 7 (1905)

[61] 204 NY 96; 97 NE 472 (1912)

[62] 210 NY 235; 104 NE 622

[63] 222 NY 272; 118 NE 618

[64] 263 NY 79; 188 NE 163

[65] [1982] 2 NSWLR 766

[66] 941 F 2d 588 (7th CCA 1991)

[67] 941 F 2d at 595

[68] See Farnsworth Farnsworth on Contracts (3 ed.) (2004; Aspen Publishers) at section 7.17-7.17b (pages 354-402), in particular see discussion at pages 357-360 and footnotes 13, 15-17; Vylene Enters v Naughes Inc 90 F.3d 1472 (1996); Scheck v Burger King Corp 798 F.Supp 692 (1992); In re Hennepin County 1986 Recycling Bond Litigation 540 N.W.2d 494 (1995); Kaplan v First Options of Chicago 143 F.3d 807 (1998); Geoffrey E Macpherson Ltd v Brinecell Inc 98 F.3d 1241 (1996); Third Story Music v Waits 48 Cal. Rptr.2d 747 (1995)

[69] United Group Rail Services Ltd v Rail Corp New South Wales [2009] NSWCA 177; 74 NSWLR 618; Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268; 15 BPR 28,563; Renard Constructions (ME) v Minister for Public Works (1992) 26 NSWLR 234; Hughes Bros (1993) 31 NSWLR 91; Burger King v Hungry Jack's [2001] NSWCA 187; 60 NSWLR 558; Hughes Aircraft Systems [1997] FCA 558; 76 FCR 151; Paciocco [2015] FCAFC 50; 321 ALR 584

[70] Renard Constructions (ME) Pty Ltd v Minister (1992) 26 NSWLR 234

[71] Commonwealth Bank of Australia v Barker [2014] HCA 32 at [42], [104]-[107]; Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5 at [40] and [156]

[72] See recent cases of: Alstom Ltd v Yokogawa Australia Pty Ltd and Anor (No 7) [2012] SASC 49

[73] See recent cases of: Vakras v Cripps[2015] VSCA 193; Tote Tasmania Pty Ltd v Garrott [2008] TASSC 86; Capital Aircraft Services v Nicholas Carl Brolin [2007] ACTCA 8 at [24]

[74] See recent cases of: Trans Petroleum (Australia) Pty Ltd v White Gum Petroleum Pty ltd [2012] WASCA 165; Gramotnev v Queensland University of Technology [2015] QCA 127

[75] Paciocco v ANZ Banking Group Ltd [2015] FCAFC 50 at [287]-[293]

[76] Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 at 264

[77] Ibid at 265-6 (regarding case law in the United States)

[78] Note, such an obligation has not always been seen as bearing the title "good faith", see for example Silverbrook Research Pty Ltd v Lindley [2010] NSWCA 357 at [5]-[6]

[79] This distinction was explored by Elizabeth Peden Good Faith in the Performance of Contracts (2003; Lexis Nexis Butterworths) in Chapter 6; There have also been similar developments in the law of restitution.

[80] GEC Marconi Systems Pty Limited v BHP Information Technology Pty Limited [2003] FCA 50; 128 FCR 1 1 at 208-209 [918]-[922]

[81] BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266

[82] 14 PD 64

[83] Liverpool City Council v Irwin [1977] AC 239

[84] Stirling v Maitland (1864) 5 B&S 840 at 852; 122 ER 1043 at 1047 (Cockburn CJ)

[85] Mackay v Dick (1880-81) LR 6 App Cas 251 at 263 (Lord Blackburn)

[86] Butt v M'Donald (1896) 7 QLF 68 at 70-71 (Griffith CJ)

[87] Shepherd v Felt & Textiles of Australia Ltd [1931] HCA 21; 45 CLR 359 at 378

[88] LR 6 App Cas at 264

[89] See also Secured Income Real Estate (Australia) Ltd v St Martins Investment Pty LTd [1979] HCA 51; 144 CLR 596

[90] Meehan v Jones [1982] HCA 52; 149 CLR 571

[91] Stadhard v Lee (1863) 3 B&S 364 at 371-2; 122 ER 138 at 141

[92] Carr v JA Berrriman Pty Ltd [1953] HCA 31; 89 CLR 527

[93] Godfrey Constructions Pty Ltd v Kanangra Park Pty ltd [1972] HCA 36; 128 CLR 529 at 538

[94] Godfrey Constructions at 543, 547, 549-555; and see Pierce Bell Sales Pty Ltd v Frazer [1973] HCA 13; 130 CLR 575

[95] United States Surgical Corporation v Hospital Products International [1982] 2 NSWLR 766 at 800

[96] Service Station Associations Ltd v Berg Bennett & Associates Pty ltd (1993) 45 FCR 84

[97] 210 NY 235; 104 NE 622

[98] 222 NY 272; 118 NE 618

[99] 263 NY 79; 188 NE 163

[100] Butt v M'Donald (1896) 7 QLF 68

[101] Shepherd v Felt & Textiles of Australia Ltd [1931] HCA 21; 45 CLR 359 at 378

[102] Butt v M'Donald (1896) 7 QLF 68

[103] Shepherd v Felt & Textiles of Australia Ltd [1931] HCA 21; 45 CLR 359

[104] [1974] 1 WLR 1308.

[105] [1974] 1 WLR 1308 at 1315-1316

[106] [1978] AC 904 at 925

[107] Pre judgment interest was given in Admiralty: Robinson Admiralty Law in the United States (1939; West Publishing) at 850ff; and Roscoe's Admiralty Practice (4th ed) (1920; Stevens and Sons and Sweet and Maxwell) at 375.

[108] See, for example, Davies v Mann (1842) 10 M. & W. 546; Greer, L.J. in The Eurymedon [1938] P.41

[109] The Firefly (1857) Swab 241; 166 ER 116 at 117

[110] See the cases referred to in Paciocco v ANZ [2015] FCAFC 50; 321 ALR 584 at [277].

[111] cf Ford v Perpetual Trustees Victoria Ltd [2009] NSWCA 186; 75 NSWLR 42 at 72 [131] and AFSL v Hills [2014] HCA 14 at [78]

[112] Judge Posner in Market Street Associates Limited Partnership v Frey 941 F 2d 588 (1991)

[113] Rossiter CJ, Penalties and Forfeiture (1992; Law Book Company) at 138-142, 147-154 and 210-211

[114] (1991) NSW Conv R 55-582

[115] See also the concluding remarks of the judgment in Interstar Wholesale Finance Pty Ltd v Integral Home Loans Pty Ltd [2008] NSWCA 310 at [159]-[160], [163] and [164].

[116] Andrews v ANZ [2012] HCA 30; 247 CLR 205

[117] Interstar Wholesale Finance Pty Ltd v Integral Home Loans Pty Ltd [2008] NSWCA 310; 257 ALR 292 at [98]–[138]

[118]Andrews v ANZ [2012] HCA 30; 247 CLR 205 at [44], [60], [65]

[119] It may be unfair to refer to Toll v Alphapharm [2004] HCA 52; 219 CLR 165 in this context, but the sense of the Talismanic status of the signature drawn from L'Estrange v Graucob [1934] 2 KB 394 may go beyond the needs of commercial certainty. Successful counsel in L'Estrange v Graucob, Mr A T Denning, was a little surprised, but more than pleased to win: D Foxton The Life of Thomas E Scrutton (2013; Cambridge) at 313. The troubling nature of [161] in Kakavas v Crown Melbourne Ltd [2013] HCA 25; 250 CLR 392 (and how it sits with the exoneration of the bank manager in Commercial Bank of Australia v Amadio [1983] HCA 14; 151 CLR 447 at 478-479) may, unless read as limited to arm's length commercial transactions, lead to rigid application of a powerful equitable principle by losing sight of the equitable technique in Jenyns.

[120] Such as House of Representatives Standing Committee on Industry, Science and Technology: "Finding a balance – toward Fair Trading in Australia", (1997); Productivity Commission – "Review of Australia's Consumer Policy Framework" (2008); Senate Standing Committee on Economics "The need scope and content of a definition of unconscionable conduct for the purposes of Part IVA of the Trade Practices Act" (2008); Department of Treasury "The nature and application of unconscionable conduct regulation: can statutory unconscionable conduct be further clarified in practice?" (2009); Parliamentary Joint Committee Report – "Opportunity not opportunism: improving conduct in Australian franchising"; an Expert Panel Report – "Strengthening statutory unconscionable conduct and the Franchising Code of Conduct" (2010); the Wein Report to the Minister for Small Business – "Review of the Franchising Code of Conduct" (2013).

[121] [1940] HCA 12; 63 CLR 209 at 226-227

[122] WMC Gummow Change and Continuity: Statute, Equity and Federalism (1999; Oxford Press) at 18

[123] [1953] HCA 2; 90 CLR 103

[124] [1985] HCA 78; 160 CLR 583 at 615-616

[125] Lamb v Cotogno [1987] HCA 47; 164 CLR 1 at 11; and see WMC Gummow  op cit n 122 at 11-18.

[126] 522 US 3 (1997)

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