Commercial Bank of Australia Ltd v Amadio: Difference between revisions

'''''Commercial Bank of Australia Ltd v Amadio''''',<ref name="151 CLR 447">{{cite AustLII|HCA|14|1983|litigants=Commercial Bank of Australia Ltd v Amadio |parallelcite=(1983) 151 [[Commonwealth Law Reports|CLR]] 447 |courtname=auto}}.</ref> is ana seminal case in [[Australian contract law]] and [[Equity (law)|equity]] case, in which the legalHigh issueCourt ofheld that [[unconscionable dealing]] due to a lack of knowledge or education is examined and the implications as to the imbalance in bargaining power are considered could unwind a transaction.

The case is a formative case for the defence of unconscionability, a precursor to statutory unconscionability, and is studiedtaught underin contract law in Australian law schools.

TheGiovani Amadiosand Cesira Amadio, whose son, Vincenzo, carried on business as a builder, guaranteed thetheir son's indebtedness to the [[Commercial Bank of Australia]]. To this end, they executed certain documents the effect of which was to provide the bank with a [[mortgage]] over a building which they owned. When the son's business failed, the bank sought to enforce the guarantee. In their defence, the Amadios asserted that the guarantee was unenforceable because it was [[Unconscionability in English law|unconscionable]]. They were held to be at a "special disadvantage" as an equitable doctrine in [[Equity (law)]].<ref>{{cite journal |title='Unfair' results and unfair doctrines |first=A |last=Sykes |year=2006|journal=Murdoch University Electronic Journal of Law |volume=13 |issue=1 |url=https://elaw.murdoch.edu.au/archives/issues/2006/1/eLaw_Sykes_13_2006_04.pdf |archive-url=https://web.archive.org/web/20150312052335/https://elaw.murdoch.edu.au/archives/issues/2006/1/eLaw_Sykes_13_2006_04.pdf |archive-date=12 March 2015}}</ref> With unconscionable conduct having no definition at a legislative level (other than conduct lacking in goodfaith) it is largely up to the presiding judicial member to determine as to whether compliance is efficient on a statutory basis.<ref>{{cite web|title=Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 |url=http://ceds.vu.edu.au/buslaw/commerci.htm |url-status=dead |archive-url=https://web.archive.org/web/20120503010606/http://ceds.vu.edu.au/buslaw/commerci.htm |archive-date=May 3, 2012 }}</ref>

The Amadios commenced proceedings in the [[Supreme Court of South Australia]] seeking to set aside the mortgage and guarantee. In relation to the claim that there was an unconscionable bargain, and the claim that the bargain was procured by undue influence, [[Andrew Wells (judge)|Wells J]] helddelivered an ex tempore judgment in favour of the bank, holding that there was nothing to suggest to the bank officers that the Amadios did not understand the guarantee noror the financial predicament of the son's company,. andThe if theyson had, theyspoken wouldto nothis haveparents givenin theItalian, guarantee. Onin the partpresence of the bank officers, "ifgiving the bank officers hadthe knownimpression that the plaintiffsAmadios hadunderstood sothe imperfectguarantee anand financial understandingindebtedness of his company. In fact, the principalson documenthad andwithheld itsthe legalkey consequences,information from his parents to try and ofmaintain the circumstancesappearance givingof risesuccess. toWells itsJ application,held asthat theythe had, whattransaction was actually"an doneordinary byone, thosestruck officersin wouldthe haveusual fallenand shortregular course of whatcommerce" and that the lawbank required"was ofunder themno inlegal or moral duty to acquaint themselves with the specialunderlying circumstances.facts". His Honour held that any hardship, or inequality of bargaining power, was unknown to the bank and the transaction was not unconscionable.<ref>{{cite AustLII|SASC|5303|1981|litigants=Amadio v Commercial Bank of Australia Ltd |courtname=auto |date=23 January 1981}}.</ref> Wells J concluded with these remarks: "where one or other of the parties... have to suffer severe loss in the judgment,... it always makes me a little sad that some sort of arrangement could not have been come to, to soften the effects of such a judgment."