ASSIGNMENT
The case - Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447 (12 May 1983)
The case for study is Amadio v CBA
This short summary will help you understand the judgments:
- Mr and Mrs Amadio were immigrants to Australia of Italian birth, had a relatively poor command of English and limited business experience.
- They were induced by their son Vincenzo to be guarantors of loans by the bank to Vincenzo, whom they believed to be successful in business. [A guarantee is just a contract between a lender (usually a financial institution) and a person called the guarantor. The contract is formed by the guarantor's making an offer to the lender that if the lender grants a loan to a third party (the borrower), and the borrower fails to repay the loan, the lender can then call on the guarantor to make the repayment. ]
- In fact, Vincenzo's business was in a severe financial difficulties.
- The bank knew this, but allowed Vincenzo to explain to his parents the nature of the guarantee and mortgage documents they were signing.
- Vincenzo failed to repay the loans and the bank called on Mr and Mrs Amadio under the guarantee.
- Mr and Mrs Amadio challenged the enforceability of the guarantee contract.
- At the first hearing the bank was successful in defending the claims brought against it by Mr and Mrs Amadio.
- An appeal court reversed that decision and gave judgement for Mr and Mrs Amadio.
- The bank appealed against that decision to the High Court of Australia where the case was heard by four judges. It is the decision of that court that you read (although contained within it is a summary of what the earlier courts decided).
QUESTIONS
1 Mr and Mrs Amadio relied upon three causes of action (ie, three legal issues, not just facts) when they challenged the mortgage guarantee they had signed? Refer to the lecture notes for lecture 3 (Contracts 2) and identify which of the three grounds for avoiding a contract given in those notes the Amadios relied upon.
2 The Appeal Court reversed the decision of the trial (ie, first) judge and decided that the bank was liable to the Amadios for three reasons. State any two of the reasons (ie, wrong conduct by the bank) which the Appeal Court identified.
Questions 3-5 are based on the judgment of Justice Gibbs
3 Justice Gibbs ruled that a bank is not obliged to disclose to an intending guarantor the state of the account to be guarantee except in a certain circumstance. What is that circumstance?
4 What were two circumstances (facts) in this case which persuaded Justice Gibbs that the bank should have made such a disclosure to the Amadios?
5 Justice Gibbs concluded that the bank's failure to disclose either of the two situations referred to in question 4 constituted which of the torts discussed in lecture 3?
Questions 6 and 7 are based on the judgment of Justice Mason (who decided the case on different grounds):
6 What was the ratio (ie, the particular tort discussed in lecture 3) which Justice Mason considered the bank to be guilty of?
7 Justice Mason identified several ways in which the bank on the one hand and Mr and Mrs Amadio on the other hand were in positions of what he called "gross inequality of bargaining power." What were any three of those ways?
Justice Mason and Justice Deane both explained the legal difference between the torts of unconscionable conduct (unconscionability) and undue influence.
8 State in your own words [ie, do not just cut and paste from the judgments] the difference between these two torts which the two judges explained (you may find it useful to refer to lecture notes for some help in answering this question).
9 How did the situation of the Amadios fit each of these two torts?
Answer the following from the judgment of Justice Dawson (who was the dissenting judge)
10 What should be the general test (ie, 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?
Referencing: APA