Unfair commercial practices occur when a business violates consumer trust through fraud, misrepresentation, or excessively unfair terms. Most jurisdictions have laws in place to protect consumers, with remedies including restitution, injunctions, and punitive damages. Defrauding or misrepresenting consumers is a common example, while unconscious unfair terms due to a disparity in bargaining power can also give rise to a claim.
Unfair commercial practices occur when a business acts in a way that violates the general trust of consumers in those businesses. They can apply to a number of areas, from the obvious in the purchase of various products and services to less obvious cases such as debt collection and lease matters. In general, to qualify for an unfair commercial practice, the act performed by the firm in question must have involved fraud, misrepresentation or an act which by its sole commission implies the firm has relied on excessively unfair terms.
Most jurisdictions have unfair commercial practices laws in place to protect consumers from such practices. In general, statutes will outline the type of act that may give rise to an unfair trading practice claim and will stipulate the remedy that will be granted in a given situation. Most commonly, the remedy is restitution, but where appropriate, the court will grant an injunction to cease the practice in question. If the circumstances are particularly serious, the court may order punitive damages or an injunction to cease operations altogether. Many jurisdictions now have a requirement that anyone who files an unfair trading practice complaint suffer some sort of tangible financial damage to collect an award.
One circumstance that could give rise to an unfair commercial practices claim is defrauding or misrepresenting consumers in the conduct of business. For example, a car dealership may advertise a used car for sale that the engine, brakes, or other aspects of the vehicle have been replaced with brand new parts. If the vehicle in question has not, in fact, been maintained in the manner claimed by the company in its advertisement, then it may constitute an unfair commercial practice by means of fraud. The buyer of the vehicle would likely be entitled to a refund of the amount of the difference between the price paid and the value of the car without the misrepresented improvements.
The unconscious – overly unfair terms due to a large disparity in bargaining power – is something that is less easy to prove, but some circumstances still give rise to this kind of claim. A pharmaceutical company that offers an investigational drug for the treatment of cancer to the market with the proviso that anyone purchasing and using the drug cannot sue the company for any reason may give rise to an unfair trade practices action because of unreasonableness. The existence of a life-threatening disease and the resulting desperation to find a cure creates a strong potential for unequal bargaining power. A clause that takes advantage of such desperation in that way is likely to be deemed inconceivable.
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