The Australia Consumers Law Deals With Unconscionable Conduct Essay

773 WordsDec 17, 20144 Pages
Unconscionability refers to an agreement entered into against the dictates of good conscience. Section 21 of the Australia Consumers Law deals with unconscionable conduct pertaining to the acquisition or supply of goods or services. Section 21(2) sets out the factors to be considered in determining whether the contract is unconscionable and these are: (1) The relative bargaining power of each party; (2) In Commercial Bank of Australia v Amadio 1, an elderly couple (Mr. and Mrs. Amadio) migrated to Australia forty year ago, without formal education and without a mastery of English, were persuaded by their son, Vincenzo to guarantee and mortgage to the bank a property they owned as security for the overdraft of their son’s company to the bank. They were misled into thinking that the liability was limited to $50000 and for half a year. When their son’s company failed, the bank tried to exercise power of sale under mortgage. The liability eventually turned out to be significantly higher because the guarantee was a continuing “all monies” guarantee which was not limited in time. The couple claimed that they would not have entered into the contract if they had known about the dire financial position of their son’s company. Furthermore, the bank did not ask them to seek legal advice prior to the signing of the contract. The majority of the High Court held that the mortgage ought to be set aside due to unconscionable conduct on the part of the bank. In the Amadio case, Deane J
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