The Impact of Section 51ac of the Trade Practices Act 1974 (cth) on Commercial Certainty

[Section 51AC of the Trade Practices Act 1974 (Cth) was introduced in 1998 to protect small business from unconscionable conduct. This initiative was taken following a number of government reports that highlighted the exploitation some small businesses suffer at the hands of larger businesses. This article argues that legislative intervention in this context is justified and that the mechanism adopted by s 51AC is appropriate. Indeed, the provision is neither likely to undermine commercial certainty nor have a significant impact on business activity. The Australian judiciary has thus far been cautious in its approach to the interpretation of obligations contained in the provision, limiting its use to cases that satisfy a threshold test of demonstrated ‘serious misconduct’ during contractual formation or performance, or ‘bad faith’ in the exercise of contractual rights. This balanced approach accords with nearly 50 years of experience with a comparable statutory commercial unconscionability provision in the United States.]