Total Words : 1051
Name : Zi Lin ( Emilie )
Student Number : 706479
Teacher’s Name : Jonathan Bowlby
Group : 4
Does XZA Bank Pty Ltd have legal right to sell Ji’s house based on the loan contract he signed? Rules
The case of Commercial Bank of Australia v Amadio and Blomley v Ryan demonstrate the bank’s conduct were unconscionable. The court look at 3 main elements to determining whether to activate the doctrine of unconscionability. • Special disadvantage: A person’s ability to look after their own interests is affected. • Knowledge of Special disadvantage : The other party knows or ought to know of the disadvantage. • Taking unfair advantage of special disadvantage: Abuse by one party of its superior bargaining position in its dealings with the other party. Application
In this case, Ji is an elderly man and has difficulty in understanding English. He has had no business experience himself. The manager of XZA Bank is aware that Ji has no other assets and is dependent on the old age pension for all living expenses then still persuades Ji to sign the mortgage contract immediately without informing Ji of the consequences if he fails to repay the loan. Refer to the case Blomley v Ryan, The judger Fullagar J had listed the factors which might give rise to equitable intervention including “ poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary. ’ Many of the factors mentioned in Blomley were presented in Ji’s case. Ji is an elderly man and limited grasp of English. Plus the fact that he lacks of assistance and explanation, hence we have enough evidence to believe that Ji is under special disadvantage. The bank manager not only knew that Ji is old and difficulty in understanding English, but also failed to advice him of the consequences of failing to fulfill the contract or to explain the contract in detail. The bank manager lacks of providing pertinent information. The manager not merely has knowledge of Ji’s special disadvantage, and took no steps to ensure that he understood the nature of the transaction. In order to complete the contract quickly for his personal reasons, the manager gives no time to Ji to obtain independent advice. The manager, in essence, abuses Ji with his superior bargaining position. Therefore, the bank has taking unfair advantage of Ji’s special disadvantage. With some support from Diprose v Louth and Bridgewater v Leahy, the court dose not allow any person to take advantage of any known weakness of the other party. And also, in this case, the circumstance fully satisfied the 3 main elements of doctrine of unconscionability. Therefore, the actions of the bank is unconscionable conduct. Conclusion
In a radical departure from classical contract law, under several precedents, the signature on the loan contract did not signify assent to the term in the contract. Therefore, the transaction between Bank and Ji could be set aside. The XZA Bank Pty Ltd have no legal right to sell Ji’s house.
Is Roo-Oil Ltd entitled to terminated the contract ?
The courts apply the test of essentiality to determine whether a contract is an condition or warranty. That is, looking at the contract as a whole and ask whether the term is of such importance to the innocent party, that the innocent party would not have entered into the contrat unless that term was fulfilled. Breach of condition entitles the innocent party to claim damages and terminate the contract, refer precedent Associated Newspapers Ltd v Bancks. Breach of a warranty entitles the innocent party to damage only, the innocent party is not entitled to terminate the contract, refer precedent Bettini v Gye. Additionally, the precedent HongKong Fir...