Securing Higher Grades Costing Your Pocket? Book Your Assignment at The Lowest Price Now!

Commercial Bank Of Australia V Amadio Add in library

expert-image Helen Taylor 4.8/5 hire me
0 Download7 Pages 1,730 Words


Discuss about the Commercial Bank of Australia v Amadio (1983) HCA 14; 151 CLR 447.



Commercial Bank of Australia Ltd. v Amadio (1983) 151 CLR 447 is a case based on the Australian Contract Law and equity. In this case, the main issue is the unconscionable dealing. When a person lacks understanding and teaching and has imbalances in the bargaining power he is considered to have unconscionable dealing. The contract law deals with the subject of unconscionable dealing (Brody and Temple 2016).


Amadios’s son carries business of a promoting and building. The son has several debts with the Commercial Bank of Australia for which he needs to mortgage a property. Therefore, he guaranteed by mortgaging a building which he owned with the bank by executing certain documents. When his son failed in repaying his debts the bank, enforce the guarantee. The Amadios held that the guarantee is not enforceable because it was unconscionable.


The first issue in the case is “unconscionable conduct “. Unconscionable conduct is a statement, which means that no proper explanation has been provided to a person.  According to Section 21 of the Australian Consumer Law prohibits unconscionable conduct. In this, the bank manager has not disclosed anything before the Amadios and so they are ignorant of the fact that their building has been put for guarantee and for nonpayment of debts their property will be enforced as guarantee (Fleming 2014).

The second issue in the case is “misrepresentation”. Misrepresentation is a false or misleading statement made by one party to a contract to deceive another person to enter into the contract. In the present case bank has misled the Amadios by not disclosing the terms of the contract.

The third issue in the case is undue influence. Undue influence means the strongest party to the contract dominates the weaker party to enter the contract. In the case the Amodios has put before the court that the bank has undue influenced him to enter the contract of guarantee (Cornell 2015).

Appeal decision of the High Court:

The High Court decided in the appeal case that the bank had the obligation to disclose the real position of the bank balance of the business. The court also held that the contract was unconscionable and for which the law of equity should be applied.

The court dismissed the case on the grounds of misrepresentation. The court is of the view that the bank should have entered the contract with utmost good faith by disclosing the material facts to the other party of the contract.  The bank failed to disclose all the relevant facts and circumstances to the other party i.e. the Amodios and resulted to misrepresentation of the material fact and the mortgage and the guarantee is not binding on the respondents (Kiefel 2016).

The court more observed the issue of express misrepresentation was made. The court is of the opinion that bank has the responsibility to disclose the facts of the case and he willfully neglects such responsibility. Thus, the respondent is not any way liable and the bank is responsible for the misrepresentations done by the son, Vincezo Amadio. 

Whether a bank is required to inform a intending guarantor regarding the state of account of the customer which is to be guaranteed:

 As per the decision as laid down by Justice Gibbs on the issue of misrepresentation by non-disclosure is that a bank which takes a guarantee is responsible to disclose the intending surety regarding the transaction that take place between the bank and the principal debtor. In Llouds Bank Ltd V Harridon it has been held that it may disclose only on requiring it, the court held that usually the bank has no strict liability to disclose to the guarantor about the statement of the account. The bank shall be liable or the duty of the bank to disclose or rather share the details in case there is a special arrangement between the bank and the customer. The bank if in such case does not disclose the material information available, then it is said to have misrepresented a material fact of the dealing resulting in to the non-binding of the guarantee.  The above-referred case has a similar aspect. There was a special arrangement with the bank and Vincenzo and so bank knowing the state of account Vincenzo has been dealing in should have been disclosed to the guarantor (Bryan et al 2016).


Two facts in this case upon which bank should have made such disclosure:

As per the decision of Justice Gibbs in the present case, the bank should disclose all material information available to him based on the statement in case it is a special arrangement between the bank and the customer. In the referred case the circumstances between the bank and Vincenzo is a special circumstance on the basis of two facts such as, firstly, the arrangement between the bank and Vincenzo is to limit the overdraft facility within a short period and secondly, the regular dishonoring of cheques will lead to an deceptive outward appearance of the company (McCullough 2015).

Ratio for Justice Gibbs decision:

Justice Gibbs identified three issues in deciding the case. Firstly, Justice Gibbs took the  issue in relation to non disclosure of material fact. He held that the contract of guarantee was not made out of utmost good faith. The bank has the responsibility to share all the material facts about the account and dealings of the principal debtor. In this case it was an special arrangement and the bank is responsible to disclose the facts of the case to the guarantor. As per the case there were such unusual features related to the account of Vincenza and the bank was supposed to disclose them to the guarantor. Therefore, it has been held that the bank is liable for the misrepresentation and the contract stands unenforced. Secondly, Justice Gibbs is of the opinion that the issue of express misrepresentation was made by Vincenzo and not the bank but the bank was equally liable for the misrepresentation of Vincenzo Amadio that bank has willfully ignored to disclose the facts and circumstances of the guarantee. Thirdly, Justice Gibbs on the issue of unconscionable conduct held that the bank made no unfair use of its position and thus unconscionable conduct does not arise (Murray 2014).

Difference between Justice Masons decisions with Justice Gibbs:

Justice Mason decision has less of similarity and more of difference. Justice Mason in his decision said that the bank is liable for the unconscionable conduct as well as misrepresentation for non- disclosure and has held that the mortgage for guarantee be set aside and dismissed the appeal. Whereas Justice Gibbs has held that the bank is liable for non disclosure of material facts and the bank is no way liable for the unconscionable conduct (Paterson and Wong 2016).

Gross inequality on the part of both the parties:

Both bank and the Amodios share a gross inequality. The bank has the liability to disclose all material facts to the Amodios. Non-disclosure of facts have held the bank liable of misrepresentation. Moreover, the bank has shown willful ignorance in disclosing the facts of the case. Gross inequality in the part of Amodios is that being a prudent man everyone should intend to know the reasons or facts of such guarantees (Thampapillai, Bozzi and Matthew 2015).

Definitions put forth by Justice Mason and Justice Dean:

According to Justice Mason Undue influence has certain difference with Unconscionable conduct. In undue influence the will of the innocent party is not voluntarily taken whereas in case of unconscionable conduct the innocent party or the weaker party has taken its decision voluntarily. According to Justice Mason the two remedies are exclusive in its own sense. In case of undue influence it the weaker party who could not take its decision independently but in case of unconscionable conduct, they decide voluntarily but could not judge the impact of their decision.

According to Justice Dean’s Undue influence looks into how or in what manner the decision has been taken but in case of unconscionable conduct it is it deals with the stronger party by applying unconscionable dealing how the party gets benefited.

According to Justice Dawson test on how bank shall be made liable:

According to Justice Dawson, bank has no such responsibility to provide or disclose material facts of the case to the guarantor. It is the responsibility of the guarantor to intend to know about the facts of the statement of the bank account for which he has been made guarantor. The bank would have been liable only if the guarantor has intended to know the statement of the account and the bank wilfully ignores such intention of the guarantor.

Thus, concluding the case with the view that bank is liable for non-disclosure of the facts of the case. Bank stands as a stronger party and is the holder of material facts of the case. So it is the liability of the bank to disclose the facts of the case.  The bank is also responsible for wilful ignorance to disclose the facts of the account in which he has entered in guarantee. Thus, the contract of guarantee stands unenforceable and the appeal be set aside.



Brody, G. and Temple, K., 2016. Unfair but not illegal: Are Australia's consumer protection laws allowing predatory businesses to flourish?. Alternative Law Journal, 41(3), p.169.

Bryan, M., Degeling, S., Donald, S. and Vann, V., 2016. A Sourcebook on Equity and Trusts in Australia. Cambridge University Press.

Cornell, N., 2015. A Complainant-Oriented Approach to Unconscionability and Contract Law. U. Pa. L. Rev., 164, p.1131.

Fleming, A., 2014. The Rise and Fall of Unconscionability as the'Law of the Poor'.

Kiefel, S., 2016. Good faith in contractual performance: A background paper for the Judicial Colloquium. Brief, 43(5), p.26.

McCullough, C., 2015. Unconscionability as a Coherent Legal Concept. U. Pa. L. Rev., 164, p.779.

Murray Jr, J.E., 2014. The Judicial Vision of Contract: The Constructed Circle of Assent and Unconscionability. Duq. L. Rev., 52, p.263.

Paterson, J.M. and Wong, V., 2016. Consumer Protection, Statute and the Ongoing Influence of the General Law in Singapore. SAcLJ, 28, p.1079.

Thampapillai, D., Tan, V., Bozzi, C. and Matthew, A., 2015. Australian Commercial Law. Cambridge University Press.

Virgo, G., 2015. Principles of the Law of Restitution. Oxford University Press, USA.

OR is the perfect solution to render quality solution for all sort of academic issues. We have hired professionals from different fields of study to provide assistance with different subjects. We successfully have provided different types of assignment solutions on 100+ subjects. We have hired industry experts to deliver nursing assignment, hr assignment and finance assignment help. To offer quality content with IT assignments, we have hired IT professionals to render programming language assignment help and IT assignment help for other types of IT assignments as well.

Most Downloaded Sample of Business Law

243 Download13 Pages 3,015 Words

Corporation Law Assignment

Introduction The regulation and proper operation of any company or corporation is completely dependent on the nature and manner in which the directors and other offi...

Read More Tags: Australia Arlington Management Management University of New South Wales Management 
214 Download7 Pages 1,532 Words

Employment Law Assignment

Employment Law Explain the constitutional basis for the Fair Work Act 2009 (Cth) with reference to the Australian Constitution and discuss the relationship with Au...

Read More Tags: Australia Arlington Management Management University of New South Wales Management 
447 Download9 Pages 2,104 Words

Taxation Law Assignment

John was an architect and was employed by a small firm in the Melbourne CBD. He worked part-time. On his days off, he enjoyed designing and printing T-shirts. He st...

Read More Tags: Australia Arlington Management Management University of New South Wales Management 
109 Download13 Pages 3,118 Words

International Business Law Assignment

Question 1 The International business law is concerned with the rights of business with each other and with international organizations. Domestic law is within t...

Read More Tags: Australia Arlington Management Management University of New South Wales Management 
258 Download10 Pages 2,335 Words

Capital Punishment Is A Good Measure To Ensure Less Financial Cost On Government, Public Safety And Deterrence Of Future Crimes.

  Introduction Capital punishment is punishing of a person by the state as a discipline for wrongdoing. Law violations that can bring about capital punishmen...

Read More Tags: Australia Arlington Management Management University of New South Wales Management 
Free plagiarismFree plagiarism check online on mobile
Have any Query?