Amadio v CBA - Understanding Unconscionable Conduct and Misrepresentation in Guarantees

Explore the case of Amadio v CBA to understand how unconscionable conduct and misrepresentation play a role in guarantee contracts. Learn about the liability of banks and guarantors in cases of procedural and substantive unconscionability.

Amadio v CBA
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Table of Contents
Question 9: How did the situation of the Amadios fit each of these two torts?.........................3
Question 10 What should be the general test (i.e. the proper circumstance) in which a bank
would be liable to a guarantor who has been induced to give a guarantee as a result of some
misrepresentation about the guarantee?.....................................................................................4
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Question 9: How did the situation of the Amadios fit each of these two torts?
The situation of the Amadios explains the unconscionable conduct and the case of negligence
on the part of the bank. In this case, the issue was that whether the Amadio will be liable by
the guarantee contract. In this, the bank manager already knew about the special disability of
Amadios then too does not step forward to ensure that the nature of transactions is
understood. Hence in this situation, it seems that there is taken the advantage by the bank
which held it conscientiously.
The situation of the Amadios fits into the case of procedural Unconscionability where there is
lack of understanding on the part of consumers to take the independent decisions. Here the
bank is taking the advantage of the lack of understanding of consumer and in a situation of
substantive Unconscionability, it provides that the situation of the undue influence is made to
bear upon them.
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Question 10 What should be the general test (i.e. the proper circumstance) in which a
bank would be liable to a guarantor who has been induced to give a guarantee as a
result of some misrepresentation about the guarantee?
In this case, it is analysed that the contract of guarantee is not formed on the principles of
utmost good faith. This principle develops the duty on one party to disclose the material facts
to the other. According to the principles of the Australian laws, it is provided that the
guarantor will be liable for the acts of the repayment of the borrower. But if there is a
misrepresentation on the part of the guarantor only then it is the liability of the guarantor to
make the repayment. Hence in this case of misrepresentation, the liability falls on the part of
the guarantor only (Australian contract law, 2013).
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References
 Australian contract law, 2013. Commercial Bank of Australia v Amadio. Available at:
https://www.australiancontractlaw.com/cases/amadio.html [Accessed on: 23 January
2018].
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