Unconscionable conduct is also found in acts of fraud and deceit, where the deliberate misrepresentation of fact deprives someone of a valuable possession.
For instance, in Uber Technologies Inc v Heller (2020) the Supreme Court of Canada found an arbitration clause requiring gig workers in Ontario to litigate before the Dutch International Chamber of Commerce was unconscionable and so void.
As with issues of consideration, the court's role is not to determine whether someone has made a good or bad bargain, but merely whether that party had the opportunity to properly judge what was best in their own interests.
At the time the mortgage was executed, the bank manager was aware of the son's precarious financial position and knew that the Amadios, who did not speak English well, were not so informed, but did nothing to further explain the situation to them or suggest they get independent advice.
While Amadio is the leading authority on unconscionable dealing in Australia, courts have frequently relied upon other cases to help define what constitutes special disability.
The Respondent initiated legal proceedings to recover the property, alleging he had suffered a special disability entitling rescission of the contract.
[2] Improvidence must be measured with reference to the time of the contract's formation and involves a contextual assessment of "whether the potential for undue advantage or disadvantage created by the inequality of bargaining power has been realised".
[2][17][18][19] "Inequality of bargaining power" is a term used in England and Wales to express essentially the same idea as unconscionability; which can in turn be further broken down into cases on duress, undue influence, and exploitation of weakness.
In these cases, where someone's consent to a bargain was only procured through duress, out of undue influence or under severe external pressure that another person exploited, courts have felt it was unconscionable to enforce agreements.
The leading case on undue influence is considered to be Lloyds Bank Ltd v Bundy[24] which adopted the American position that all impairments of autonomy should fall under the single principle of "inequality of bargaining power".
In this case, Bundy agreed to increase the mortgage on his farmhouse in order to maintain the line of credit being extended to his son's business.
The Court of Appeal of England and Wales ruled that since the amount of the loan was already higher than the existing mortgage, Bundy received no direct benefit from the agreement to increase the mortgage amount; that the bank failed to notify him of the true financial condition of his son's business, and that it threatened to call in his son's loan if Bundy did not agree to the increase.
Furthermore, since Bundy relied upon Lloyd's for the mortgage and his son's line of credit, the bank-customer relationship was found to have created a fiduciary duty; hence, the bank should have recommended that he seek independent legal advice.
In the limited time the NatWest manager spent alone with Mrs. Morgan, she stated that she did not want to be exposed to any extra risks, as she had no faith in her husband's business ability.
Unlike Lloyds Bank Ltd v Bundy, it was found that there was no undue influence since the transaction was not a "manifest disadvantage" to the couple,[15] and that Mrs. Morgan had not established a relationship of trust and confidence in the brief time she spent with the NatWest manager.
A constructive trust arises, by operation of law, when the conscience of a legal owner is affected meaning they cannot deny the equitable interest of the beneficiary for whom they consequently hold the property as trustee.