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Case Briefs

Harry v Kreutziger

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FactsEdit

Harry was an indigenous man with little formal education who owned a boat, the "Glenda Marion" with a fishing licence. Kreutziger offered $2,000 for the boat, which itself was worth very little, but the fishing license was highly valuable (around $16,000). Harry initially refused, but Kreutziger persisted and eventually agreed on a price of $4,500. Kreutziger later unilaterally reduced the price by $570 as he had to pay back license fees of this amount to use the boat. Kreutziger assured Harry that he would be able to get another license, but he was rejected on the grounds that he had left the fishing industry when he sold the boat. Harry sued to have the sale set aside, but was unsuccessful at trial

IssueEdit

  1. Is the contract void for unconscionability?

DecisionEdit

Appeal allowed.

ReasonsEdit

McIntyre adopts the Morrison test. There is clear inequality between the parties with Harry's lack of education, the difference in class, the economic circumstances, and Harry's physical infirmity. Kreutziger's actions also demonstrate his power; he was very aggressive in the negotiations and was able to unilaterally modify the price. The deal is also clearly unfair, the price being only a quarter of the true value of the boat and licence. At this point the burden shifts to Kreutziger, who was unable to demonstrate on the evidence that the deal was fair.

Lambert takes a more modernist, localized approach. He asks "[is the transaction] sufficiently divergent from community standards of commercial morality" (a simplified version of the test in Lloyds). Taking a holistic view of the bargain, he finds that it fails this test and thus should be rescinded.

RatioEdit

There are two different approaches to a test for unconscionability:

  1. Inequality (of both the circumstances and process) plus substantial unfairness leads to a presumption of unconscionability which the stronger party must rebut (Morrison test)
  2. Community standards of commercial morality (a simplified Lloyds test)

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