Introduction

This collection of essays is concerned with the protection of the vulnerable in financial transactions, and specifically examines the role of unconscionability in those transactions. We should understand ‘financial transactions’ in a broad sense, as any contract involving valuable assets and requiring significant expertise in assessing the wisdom of entering into it. We should understand vulnerability in a broad sense too. A clear picture of this is presented by the Australian doctrine of unconscionable dealing which makes much use of the concept of ‘special disadvantage’, described by Kitto J in Blomley v. Ryan as ‘illness, ignorance, inexperience, impaired faculties, financial need or other circumstances’ that affect a person's ability to conserve their own interests. Unconscionability in this context and other contexts relevant to this chapter consists of taking unfair advantage of vulnerability.

This chapter will examine the grounds upon which the common law may be prepared to rescind or grant other relief to a vulnerable contracting party because of some occurrence in making the contract. These grounds are commonly referred to as ‘vitiating factors’. Five are commonly recognised – mistake, misrepresentation, duress, undue influence, and unconscionable dealing. In turn these can be sub-divided into two classes – mistake and unfair influence. Mistake contains the vitiating factor of ‘mistake’ itself as well as misrepresentation as a form of induced mistake. Unfair influence consists of all the others.