Commercial Law | Questions-Answers

Running head: COMMERCIAL LAW
COMMERCIAL LAW
Name of Student
Name of University
Author Note

COMMERCIAL LAW1
Answer 1
Issue
The issues that can be raised in context to the given scenario are-
 Whether the contract made by Hiro with his grandmother will be enforceable.
 Whether the contract made by Hiro with his ex-girlfriend will be enforceable.
Law
For a contract to be enforceable legally in Australia it is required for the parties to be entering
into such contract with free will and with the intention of creating a legal relation (Hunter 2017).
In case a party to a contract is induced for entering into a contract by exertion of undue influence
by the other party then the contract will be deemed void as discussed in the leading case in
Johnson v Buttress [1936] HCA 41.
In furtherance to this, a person who is of unsound mind is not legally eligible for entering into a
valid contract. Therefore, any contract that has been made with any party with unsound mind
will be considered void (Harper 2017). As discussed in Gibbons v Wright (1954) 92 CLR 423 if
a party is suffering from any mental disability and the other party is aware of it and still
influenced the former party into entering into a contract then the former party is eligible to seek
withdrawal from the contract.
Application
In the given scenario it can be observed that Hiro, an employee of the Federal Bank of Australia,
enters into two loan contracts on behalf of his bank for winning the year end competition prize.

COMMERCIAL LAW2
Hiro, in the given case can be observed as inducing his grandmother, who is an Alzheimer’s
patient, into entering into a contract of loan. Applying the Gibbons v Wright judgment in the
given scenario, it can be stated that as his grandmother has been suffering from mental
disabilities, the contract would be void. However, Hiro was unaware of his grandmothers mental
disability so the contract would not be void as per the judgement of the Gibbons case. However,
he used his relationship to coerce his grandmother into entering into a loan contract. Applying
the judgement in Johnson v Buttress in the given scenario the conduct of Hiro would be
considered as exerting undue influence to his grandmother. Therefore, the contract would be
void.
In furtherance, Hiro is also observed as making his ex-girlfriend, who is still in love with him, to
enter into a contract. He does so by promising her of marriage if she takes the loan. Applying the
Johnson v Buttress case in the given scenario, the contract would be void as it was made by Hiro
by exerting undue influence over his ex girlfriend.
Conclusion
Thus from the above discussion the following conclusions can be made-
 The contract made by Hiro with his grandmother will not be enforceable.
 The contract made by Hiro with his ex-girlfriend will not be enforceable.