1: The three challenges raised by Mr and Mrs Amadio in this case are:
Misrepresentations of facts by the debtor: According to Mr and Mrs Amadio they were signing the document by believing that their liability was $ 50000 only for the period of six months.
Bank knows about the financial position of the company and does not disclose such material fact to the surety.
Bank does not inform the surety about the arrangements between the bank and debtor. It is the duty of the bank to disclose such facts to surety because these arrangements contain the terms which are not usual and expected (Australian Contract Law, n.d.).
2: Three conclusions did the appeal court come to after its examination of the facts is:
Rules of misrepresentation are applicable in this case because terms of mortgage deed are misrepresented in this case.
Unconscionable Conduct is applicable in this case because bank hides the material information from the surety and takes unfair advantage of the position. Bank knows about the financial position of the company but did not disclose such fact to the surety.
Respondents are liable only for $50000 because they sign the document by believing that liability is of $ 50000 and for 6 months only.
3: According to Justice Gibbs bank is not bound to make disclosure to the surety in the contract of guarantee, except in case when there are some features which are not usual or normal. Bank is bound to make disclosures to the surety only when bank and debtor is entered into transactions which are not normal and expected by the surety. In this case there is a special arrangement between the bank and the debtor (Vincenzo Amadio) which is not in the knowledge of Mr. Amadio.
4: The two facts of the case which are considered by the Gibbs in making decision are:
Justice Gibbs held that there was arrangement between the debtors that is Vincenzo Amadio and bank on 24th March, according to which the company want one more overdraft of $270000. Bank was agreed for arrangement but on a condition that the overdraft limit has to be reduced to $220000 in one week and up to $180000 in a period of two weeks. Judge said surety cannot assume that such arrangements with such unusual terms are existed between the bank and debtor.
Second fact considered by Justice Gibbs was that Mr. Virgo and Mr. Vincenzo Amadio collectively decide the payment of cheques, it means they decide payment of which cheque should be made and which cheque should be dishonored. Bank tries to maintain the fake image of the company in front of its creditors.
5: According to Justice Gibbs following are the issues present in the case:
Issue of express misrepresentation: in this case bank does not disclose above two facts to the surety which was considered as misrepresentation by the bank to the surety.
Unconscionable Conduct: Gibbs said that this transaction is not containing any Unconscionable Conduct in respect of bank. Because bank does not take any unfair advantage of any disability of Mr and Mrs Amadio. If rules of misrepresentations are present in this case then there is no need to establish Unconscionable Conduct.
6: In this case Mr. Virgo was aware that Mr and Mrs Amadio were Italians and their command over English language is not good. He knows that they receive the guidance from their son about the mortgage deed and they sign the deed in the influence of their son. Mr. Virgo also knows about the financial position of the company. We considered the knowledge of Mr. Virgo was the knowledge of bank. Therefore, bank is held guilty for unconscionable conduct because bank enters into the transaction without disclosing such facts to the respondent, which possibly change the opinion of the respondent.
7: According to Justice Gibbs rules of misrepresentation are present in this case and there is no need to establish Unconscionable Conduct because bank knows about the disabilities of respondents but bank does not take any unfair advantage but Justice Mason thinks that Unconscionable Conduct is present in this case because bank knows the financial position of the company but bank does not disclose that fact to the respondent.
8: Three ways which specifies the gross inequality is exist between the parties:
As compared to bank, respondents are not able to judge whether entering into this agreement with bank was in their own interest or not. Respondents were not aware about the financial position of the company and they were in the impression that business of their son was prosperous.
Just before the execution of mortgage deed, company was not able to pay the debts and cheques of the company were dishonored. But the company was an important customer of the bank and provides business to the other branch of the bank. On the other hand respondents are completely unaware from the fact.
Execution of mortgage agreement is disastrous for the respondents but beneficial for bank because bank made the payment of their unpaid cheques which was $45000 (Austlii, n.d.).
9: According to Justice Mason unconscionable conduct and doctrine of undue influence are very resemble but there is a little difference between the two. In doctrine of undue influence will of the party is not independent and in unconscionable conduct will of the party is independent but other party take unfair advantage of their position.
According to Justice Deane unconscionable conduct and doctrine of undue influence are different in undue influence focus on the assent of weaker party whereas unconscionable conduct focuses on the strong party.
10: According to Justice Deane Mr and Mrs Amadio are liable to pay $50,000 to the bank because at the time of execution of document, they believe that their liability is for $ 50000 only for the period of six months. And they sign the document under the impression that the financial position of the company was good. On the other side bank knows the financial position of the company but did not disclose the facts to the respondents. There is a reason to believe that respondents are suffering from special disability and in this case rules of unconscionable conduct are applied (Uni Study Guides, n.d.).
11: According to Justice Dawson, if a guarantor gives guarantee to the bank due to misrepresentation of the facts by its customer, then in such case bank is not liable and there is no effect on the validity of contract, except in a case that bank knows about the misrepresentation of fact and does not disclose the fact to the surety for his own advantage.
Austlii, Commercial Bank of Australia Ltd v Amadio  HCA 14; (1983) 151 CLR 447 (12 May 1983), Retrieved on 8th September from: https://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/1983/14.html.
Australian Contract Law, Commercial Bank of Australia v Amadio; (1983) 151 CLR 447;  HCA 14, Retrieved on 8th September from: https://www.australiancontractlaw.com/cases/amadio.html.
Uni Study Guides, Commercial Bank of Australia v Amadio, Retrieved on 8th September from: https://www.unistudyguides.com/index.php?title=Commercial_Bank_of_Australia_v_Amadio#Judgment.
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