Case Study: Unconscionability in Business Law and Contract Disputes

This case study examines the issue of unconscionability in a business law context, specifically focusing on a mortgage contract between George and a finance company. The analysis explores the legal principle of unconscionable conduct, referencing key cases like Blomley v Ryan and Commercial Bank of Australia Ltd. v Amadio. It highlights how George's special disability, stemming from his age, dementia, and reliance on his daughter, coupled with the finance company's failure to ensure independent legal advice, rendered the contract potentially unconscionable. The application section draws parallels with the Amadio case, arguing that the finance company took advantage of George's vulnerability. The conclusion asserts that the contract can be avoided on grounds of unconscionability, supported by references to relevant legal literature. This case study provides a clear understanding of the concept of unconscionability and its implications in contract law.

Business Law 1
Business Law Assignment
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Business Law 2
Issue: the issue of that we are decided in this case was if the mortgage contract relating between
George and the finance company was affected by unconscionability.
Rule: In order to decide the issue, the rules related with unconscionability have to be discussed.
The principle of unconscionable conduct has been mainly designed with a view to uphold fair
play and equity (Meagher, Heydon and Leeming, 2002). According to this principle, a particular
behavior can be termed as unconscionable if it attracts censure and justifies the grant of relief by
the court to the parties that have suffered as a result of such conduct (Duggan, 2003). The
doctrine of unconscionability was relied upon by the High Court in Blomley v Ryan. Similarly,
the doctrine was further strengthened after the decision given in commercial Bank of Australia
Ltd. v Amadio (1983).
In Amadio, an elderly couple who had migrated from Italy, Mr. and Mrs. Amadio stood as the
guarantor's for the loan taken by their son from the bank. The manager of the bank was aware of
the fact that the business of the son was not doing well and probably their son had
misrepresented the facts to his parents in order to make his parents stand as guarantors for the
loan. Later on the business of their son failed and the bank tried to enforce the mortgage against
the elderly couple. The court held that the bank manager was aware of the special disability from
which the elderly couple was suffering. Still no steps were taken by the bank to ensure that the
elderly couple was aware of the nature of the transaction. Hence it can be said that it was
unconscionable for the bank to take advantage of this opportunity.
The result was the emergence of a new concept that was later on incorporated in the Australian
legislation also. After the decision given in Amadio case, a number of developments have taken
place which includes the Australian Consumer Law and also the ASIC Act, 2001.

Business Law 3
Application: in the present case also, George was suffering from a special disability. The reason
is that George is an elderly person, suffering from dementia and he completely relied on his
daughter for making decisions. Moreover, the employee of the finance company told George that
there was no need to consult a solicitor before entering the contract. The result was that the
finance company failed to make sure that George received independent advised before entering
into the mortgage contract.
Application: Under these circumstances, and in view of the decision given in Amadio case, it
can be said that the present case, the finance company was aware of the fact that George was an
elderly person and probably did not understand the nature of the transaction. Moreover, evidence
is present regarding the fact that the finance company had taken an advantage of an opportunity,
which could be termed as unconscionable. The reason was that the finance company was aware
of the fact that George was something from a special disability. Under these circumstances, the
onus falls on the finance company to establish that the transaction can be termed as just and
reasonable. This conclusion can be made primarily on the basis of the fact that George had not
received independent legal advice before entering the contract. As a result, it can be said that the
conduct of Easy Finance was unconscionable in this case.
Conclusion: it can be concluded that the contract between George and Easy Finance can be
avoided by George on grounds of unconscionability.

Business Law 4
References
Duggan, A. 2003, ‘Unconscientious Dealing’ in P Parkinson (ed), The Principles of Equity 2nd ed.
Meagher, R Heydon D and Leeming, M (2002) Meagher, Gummow and Lehane’s Equity –
Doctrines and Remedies (4th ed.) 530
Blomley v Ryan (1954) 99 CLR 362
Commercial Bank of Australia Ltd v Amadio [1983] HCA 14