Unconscionable Conduct in Contract Law of Australia

Contract Law

TABLE OF CONTENTS
QUESTION......................................................................................................................................3
REFERENCES................................................................................................................................6

QUESTION
Issue:
In the given case, Antonio who was suffering for a special disability was interested in
buying the business from David. The latter was aware about the intellectual disability of the
Antonio but then too forced him to buy the business on the false ground that the business is
going good and is having a lot of potential for generating greater profits. Antonio was unable to
read English and David also provided with financial statements of the company for the last five
years to look into and Antonio was not having enough understanding about reading the books of
accounts and was feeling embarrassed to ask the explanation about the same. But as per the
statement, the company has never made a profit in contrast to what has been claimed by David.
Thus, Antonio signed the contract without taking any prior legal advice. Thus, the issue is
whether the contract can be set aside on the grounds of unconscionable conduct or undue
influence as per the contract law of Australia.
Rule:
Unconscionable Conduct
As per the contract law of Australia, the unconscionable conduct refers to the transaction
among the parties in which one is weaker and other is stronger. The misconduct in equity
intervenes in the situation when one party in the contract takes the advantage of the other party
with special disability such as lack of education, understanding, knowledge and so forth. Such
transaction s are considered to be harsh and oppressive over the that party (weaker) (Burdon,
2018). For instance, the Australian courts have found that transactions are said to be
unconscionable in the situation when they are deliberate or there is a serious misconduct
including unfair and unreasonable practices. For example, the courts has stated that inducing an
alcoholic to have a bottle of rum and then enter into the transaction is not good conscience. There
are certain provisions which are governing unconscionable conduct under the Competition and
Consumer Act 2010 (Cth).
In reference to case law, Commercial Bank of Australia v Amadio (1983) 151 CLR 447;
[1983] HCA 14, According to this, Mr and Mrs Amadio provided the guarantee and mortgage
for the debt of their son's business amounted to $50000 for 6 months of time. Mr and Mrs
Amadio were having little education and no business related experience (Schmulow and O’Hara,
2018). Mr Virgo (to who provided debt), visited the home of the parents and got their signature