Amadio Versus Commercial Bank Of Australia

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Amadio Versus Commercial Bank Of Australia

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Amadio Versus Commercial Bank Of Australia

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Question:
Discuss about the Amadio Versus Commercial Bank Of Australia.

Answer:
Introduction

Mr. and Mrs. Amadio argued that the guarantee was not enforceable by the bank since:
There was undue influence when they entered into the contract
There was omission of information and misrepresentation of facts. Disguise of facts in obtaining the contract. It was duty of the bank to disclose the overdraft of $270,000 to parents of Mr. Vincenzo Amadio. The bank went ahead to offer them the contract while it was well aware that some information was withheld.
and Mrs. Amadio believed that they owed the bank $50 000 for six months as it was explained to them by their son Vincenzo. At the time of signing the document the respondents did not only believe that their liability was limited to $50 000, but also that it was limited in point of time. Had they known the true effect of the document they would not have signed it. They were only induced by the words of their son. For this period the banks never bothered to say a word to Amadio’s. Therefore the contract amounted to unconscionable bargain.

The three conclusions that led to reversing the decision of the trial judge by the court of appeal after examination of the facts are as follows,
and Mrs. Amadio were influenced to sign into documents whose contents they did not well understand or rather were unaware of. The Vincenzo’s parents were subjected to certain special weaknesses due their advanced age, lack of the formal education and their inability to speak English fluently which is the formal language in court and documentation plus less experience in the field of business.
Misrepresentation and concealment of some information was wholly blamed to the bank since it was their duty to disclose all facts. The banks was bestowed the responsibility because the banks agent on realizing Vincenzo had not disclosed some information to his parents, he never took action, The bank was obligated to present all information regarding the financial status of companies owned by Mr. Vincenzo. It happened the bank took advantage of the aged parents and refused to unveil all facts of the contract.
It was argued by the court of appeal that since the contract was unconscionable, remedy to provide relief is equity. This means that the contract was unfair to one party leaving it without option due to its weakness in bargaining power. There is no award issued for inducement into unconscionable contract but both parties are relived off their obligations (Wood, 2007).
Sometimes a bank will need a guarantor to give credit to its customer. Guarantor is a person who will pay the debt of a customer if the customer defaults to pay the debt (CCH Australia Limited, 2010). It is important for one to seek legal advice if he or she intends to be a guarantor. If the bank asks for a guarantor, it means that it has no complete confidence in financial position of the guarantor or his ability to service the loan. A person becomes aware of the borrowers financial difficulties when he is called to act as a guarantor. Normally the bank is no obliged to tell the guarantor about financial status of the borrower (Collins, 2009). Therefore the answer to question three part one is no. However in some circumstances a lender may be required to break this norm and disclose the financial status of a client. In specific provisions both the borrower and lender should agree on disclosing this information to the guarantor. For example if there exists an unusual feature in some particular account that is being guaranteed. Failure to reveal this information may amount to implied representation that the unusual feature did not exist (Liability, 2005).

References
CCH Australia Limited, 2010. Australian Consumer Credit Legislation. North Ryde: CCH Australia Limited.
CCH Australia, L., 2011. Understanding Australian Consumer Credit Law. Macquarie: CCH Australia Limited.
Collins, H., 2009. The Law of Contract. revised ed. cambridge: Cambridge University Press.
Liability, L., 2005. Lender Liability. London: Sweet & Maxwell,.
Office of The Federal Register, E. b. I. L., 2014. Title 12 Banks and Banking Part 1100 to End (Revised as of January 1, 2014): 12-CFR-Vol-10. Scottsdale: IntraWEB, LLC.
Pearson, G., 2009. Financial Services Law and Compliance in Australia. Cambridge: Cambridge University Press.
Wood, P. R., 2007. International Loans, Bonds, Guarantees, Legal Opinions. illustrated ed. London: Sweet & Maxwell.
Yann Aubin, L. d. L. J.-C. V., 2011. International Bank and Other Guarantees Handbook: Middle East and Africa Volume. New York:: Kluwer Law International,.

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