1 Jak’s Parents v Bank
(a) Issue:
Whether Jak’s Parents were bound by the contract of guarantee taking into account the circumstances in
which they signed it?
(b) Rules:
In the manner of upholding equity and fair play, ‘unconscionable conduct’ as a principle was initially
emphasized. It gives transferable definition for unconscionable behaviour as that which attracts censure
and justifies the courts to relieve those who suffer by it. In Australia, the doctrine was put into practice by
the High Court in the Blomley v Ryan1 case and its validity was further strengthened in the Commercial
Bank of Australia Ltd v Amadio2 case of 1983.
In Blomley v Ryan, the High Court identified the constitute of a special disadvantage as “poverty or need
of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack
of assisstance or explanation where assistance or explanation is necessary”3, which are the signature
characteristics taking parts in occurring one party at a dramatic disadvantage vis-à-vis the other.
The leading case on this area is the High Court of Australia case of Amadio, which Deane J. differeciate
the focus of undue influence is to look to the weaker party’s level of the sanction, whilst
unconscionability pay attention to ‘the conduct of the stronger party in attempting to enforce, or retain
the benefit of a dealing with a person under a special disability in circumstances where it is not
consistent with equity and good conscience that he should do so’4. The plaintiffs who were an elderly
Italian migrant couple, named Mr. and Mrs. Amadio, agreed to their son to stand as guarantors against
his loan for his companies from the Commercial Bank of Australia. The elderly couple had little formal of
edication as well as little understanding of English languague and they did not seek for any professional
consultant at the time they entered into the guarantee contract with the bank manager- Mr.Virgo. He
was in close communication with the son (Vincenzo Amadio) and had better
1
Blomley v. Ryan [1956] HCA 81; (1956) 99 CLR 362, at p 415
2
Commercial Bank of Australia v Amadio (1983) 151 CLR 447
3
Graw, Stephen. et al, Understanding Business Law (LexisNexis Butterworths, 8th ed, 2017) ch 6
4
Alias S.T. and Ghadas Z.A.A, ‘Inequality of Bargaining Power and the Doctrine of Unconscionability: Towards Substantive
Fairness in Commercial Contracts’ (2012) 6(11)(7), Australian Journal of Basic and Applied Sciences.