Prepared by Ana Torres Ahumada (LAW110).
Instructions
1. Read the facts in parts A and B of this document
2. Read part C which contains a student’s answer to the question
3. Grade the paper and provide feedback in part D. Use the forum to share
your comments and observations. You will be instructed on when to
commence this activity.
4. Compare your comments with those that your lecturer provided to the
student, see part E. Your lecturer will post her comments on the forum
once most students have completed their part of the task.
Objective s:
 To familiarise students with the standard of performance expected
 To stimulate critical thinking and judgement
 To teach students to respond to a task by using a marking guide
 To teach students to use the ILAC model effectively.
Note – The student was asked to answer parts A and B. They were advised not
to use the Competition and Consumer Act 2010 (Cth) in answering these
questions, as at the time we had not covered that topic. It was essential to follow
the I.L.A.C method.
Prepared by Ana Torres Ahumada (LAW110).
Part A [15]
Mr and Mrs Mendez are elderly and came to Australia as migrants from Colombia about 40
years ago. They are unfamiliar with written English and their spoken English is not very
good. They have two sons; Franchesco ( 27) and Problemo ( 40). Their son Problemo, a
property developer asks his parents to sign a guarantee and mortgage to the Usurer's
Commercial Bank as security for payment of the debts of Problemo's company. At the time
of signing Problemo led his parent to believe that the guarantee and mortgage were for up to
$ 50 000 and limited to six months. Mr and Mrs Mendez went to the bank and saw one of the
bank loan officers to sign the mortgage. When the loan officer tried to explain to the parents
that the guarantee is unlimited in both amount and duration the parents became confused. The
parents and the loan officer could not satisfactorily communicate, and the interview
concluded by the loan officer stating: ‘It is up to you to decide whether to sign it.’ The loan
officer did not explain to the couple the possible effect of the documents, which the Mendez
could not read, and he made no mention of the fact that the amount was unlimited. Mr and
Mrs Mendez who loved their son very much decided then to sign the mortgage, and eight
months later their son’s business collapses with Problemo then owing $500,000 to the bank.
Problemo's company went into liquidation and the bank is attempting to exercise its rights
under the mortgage/guarantee. Advise Mr and Mrs Mendez of their rights.
Part B [15 marks]
Billy Their other son, Franchesco, is thinking of putting in a new air conditioning unit in his
factory. He has been in negotiations with Freez It Aircon Ltd, owned by Fergie. One Monday
morning he comes into his office and sees the latest draft contract from Freez It Aircon, with
details of specifications of the air conditioners , price and installation date. The top sheet of
the contract contains a space which says “I agree to these terms of supply” and with a space
for a signature and date. Franchesco sets the contract aside on his desk, and it soon gets
mixed up with piles of other paperwork. Later during the day, he signs the form, thinking that
it was the front page of another contract he had been sent by a supplier of microchips. He
gives it to his office manager, Tomah, and says “Send this by fax”. A few days later a truck
from Freez It Airon arrives at Frank’s factory. Franchesco phones up Fergie and says he
never agreed to the installation. When Fergie tells him about the fax, he realizes his mistake
and tells her that he had sent it by accident. She says“Too bad, we have a deal – I have
already spent several thousand dollars making customized components for your system”.
Franchesco seeks your advice with this matter.
Prepared by Ana Torres Ahumada (LAW110).
Part C [Answer submitted by a student]
Student’s attempt – Part A
Identify legal issue
The legal issue relevant to the Mendez case lies under contract law, and the “vitiating
element of unconscionability” (Harvey Pg240). Given the Mendaz’s lack of English speaking
and language skills and this presenting a “special disadvantage” (Harvey, Pg257) in signing
the contract. The banks loan officer, who was aware of this disadvantage allowed them to
sign resulting in an unfair situation for the Mendaz’s and an unconscionable act by the
Usures commercial banks loan officer to allow them to sign. Therefore the legal issue of an
unconscionable contract was created between the Mendaz and the bank
Relevant law
Relevant law includes;




“common law” (Harvey, pg.259)
“Competition and consumer act 2010” (Harvey, pg.259)
“the fair trading act 1989 (QLD)” (Harvey, pg.259)
“contracts review act 1980 (NSW)” (Harvey, pg.259)
Legal principals
Law relevant to unconscionable contracts are common law which “permits a contract to be
deemed voidable if unconscionable conduct has taken place” (Harvey, pg.257) statute law
also prohibits unconscionable conduct under “commonwealth level’ (Harvey, pg.257) under
the “competition and consumer Act 2010 (cth)” (Harvey, pg.257) which protects “consumers
from traders in relation to U.C in supply in goods and services (Section 51 Act” (Harvey,
pg.258). State legislation “prohibits persons from engaging in unconscionably fair trading act
(QLD)” (Harvey, pg.258) and in addition to this NSW has the “contracts review act 1980
(NSW)” (Harvey, pg.258) which allows the “supreme court of NSW to review unjust and
unconscionable contracts” (Harvey, pg.258). The situations under this act relevant to the
Mendaz case include “Where either party’s education, literacy, or economic status played a
role in their decision to enter into the contract” (Harvey, pg.258).
Prepared by Ana Torres Ahumada (LAW110).
Common law
Evidence needed under common law include:



The weaker party had a disability or special disadvantage
That the stronger party knew about their disability or special disadvantage and took
advantage of this disability
That the disability prevented them from making an independent decision about the
contract.
Of importance is that the “law recognizes disability or social disadvantage in the form of
illiteracy, limited education and lack of access to legal advice” (Harvey, pg.257).
Name of case and act citied
“Commercial bank of Australia V Amado [1983] 151 CLR 447” (Harvey, pg.257)
Applying law to the ACT
Under common law the facts presented address the requirements of evidence to determine
unconscionability. The Mendaz were the weaker party due to illiteracy and limited
education in spoken English and therefore had a “disability or special disadvantage
recognized by the law” (Harvey, pg.257). facts gives evidence to the “stronger party knowing
about their disability” (Harvey, pg.257) which was evident by the Mendaz being confused
and the interview concluding without the loan officer or the Mendaz being able to
communicate satisfactorily, and lastly the disability which is relevant to this case in the form
of “illiteracy and limited education” (Harvey, pg.257) prevented them from making an
independent decision in signing the contract and their ability to give genuine consent.
Therefore the facts under common law present evidence as an unconscionable contract
existing between both parties.
Conclusion
Given the evidence requirements under common law and the facts of the Mendaz case it is
likely that the contract will be “voidable at the option of the plaintiff” (Harvey, pg.258) if the
case is to be found in favor of the Mendaz (plaintiff). (Harvey, pg.258)
.
Prepared by Ana Torres Ahumada (LAW110).
Student’s attempt ( part B)
Legal issue
Franchesco has mistakenly signed a contract with FREEZE it Aircon and therefore entered
into a valid contract due to franchescos mistake and not wanting to keep to the agreement
he mistakenly signed legal issues arise in relation to the making of a valid contract and
whether Franchesco did this but also the valadility of the contract due to his mistake
Name of case and Act citied
The case citied is (Petelin v Cullen [1975] 132 CLR 355)
Apply the law
In order to establish the valadility of the contract the three legal principals of agreement,
intention to create legal principals of agreement, intention to create legal relations and
considerations must be satisfied. Agreement took place during negotiation of the contract
which was then signed (acceptance) by Franchesco signaling an agreement exists. Signing
also “expressed intention” (Harvey, pg.208). Lastly “consideration (executory)” (Harvey,
pg.228) exists due to the content of the contract resulting in Franchesco receiving an air
conditioner and Fergie payment, resulting in each party being better off. In signing the
contract Franchesco has ensured the valadility of the contract by satisfying the legal
principals mentioned above.
The main area of contract law that could affect the contact is Franchesco’s own admittance
of making the mistake of signing the contract, under contract law such a mistake falls under
a “mistake of fact” (Harvey, pg.249) where the ‘mistake involves an error regarding the
nature of a particular document” (Harvey, pg.251) where it can be argued “non est factum”
(Harvey, pg.251) as a defense.
While the mistake falls into this area of contract law “non est factum” (Harvey, pg.251) it
can be difficult to prove. Given that in order to prove it “the document signed must be
radically different to what was expected” (Harvey, pg.251) and both contracts were similar
in that they were supply contracts and not radically different as well as the requirement of
proof that “failure to read and understand the document must not be due to carelessness”
(Harvey, pg.251) and it was signed due to carelessness on Franchesco’s behalf. The facts do
not support the proof required to prove “non est factum” (Harvey, pg.251) and makes a
difficult task even more difficult.
Prepared by Ana Torres Ahumada (LAW110).
Lastly it is important to be aware that in order for a contract to be voidable and be
rescinded so both parties are put back to the same position they were before signing the
contract, this right to retain rescission can be lost if both parties cannot be replaced
reasonably close to their original positions. In this case Fergie has already spent several
thousand dollars on making customized components for Francesco’s system and if the court
ended the contract Fergie would be out of pocket and therefore not reasonably close to her
original position and given to prove “non est factum” (Harvey, pg.251) as a defence or any
other factor that questions the valadility of the contract may be even more difficult.
State relevant law

Contract law
Legal principals & sections of Act
Legal principals relevant to Franchesco’s situation are “an offer is the initial stage of
agreement. It is a definite proposal made by the offerer to the offeree” and relates to the
negotiation between both parties, “When an offer contains terms, all of the terms must be
clearly expressed and bought to the attention of the offeree” (Harvey, pg.219) therefore
unless specified otherwise the contract is still valid. In regards to the mistake of signing the
contract the legal principal where “the mistake involves an error regarding the nature of a
particular document” (Harvey, pg.251) is relevant as the enforceability of the contract can
be affected if a “mistake of fact” (Harvey, pg.249) under “non est factum” (Harvey, pg.251)
can be proven.
Conclusion
In consideration the three elements that make a valid contract and given Franchesco has
fulfilled these, also the defense of non est factum in his mistake signature and his specific
situations, actions that do not satisfactorily argue “non est factum” (Harvey, pg.251) in the
difficulty of proving this and therefore it is likely the court would order in favor of Hilary.
Prepared by Ana Torres Ahumada (LAW110).
Part D [After reading the paper submitted by the student, you are required
to mark and grade the paper. Providing feedback is essential. In addition to
using the marking rubric provided below, you must justify your grade.
MODEL RUBRIC FOR MARKING PROBLEM-TYPE QUESTIONS
BY ANA TORES AHUMADA
Identification
of relevant
legal issues
Explanation of
law and
citation of
relevant legal
authority
Application of
legal principles
to the facts
Compliance
with the Style
Guide and
overall
structure.
FL
Identifies no
relevant
issues or only
a few of
them. Some
of these may
be unclearly
formulated.
P
Clearly
identifies some
legal issues.
May or may
not formulate
them correctly.
CR
Identifies and
correctly
formulates
most major
legal issues.
DI
Correctly
identifies legal
issues and
formulates them
with precision,
with only minor
errors.
HD
Comprehensive
coverage and
identification of
all legal issues,
which are
formulated with
precision.
Provides
incorrect or
limited
explanation
of the law
using no, or
only a limited
range of,
authority.
Provides a
basic
explanation of
the law, but
with significant
errors,
substantiated
by some legal
authority.
Provides a
substantial
explanation of
the law but
with some
errors,
substantiated
by significant
legal
authority.
Provides a
comprehensive
explanation of
the law with few
errors,
substantiated by
comprehensive
authority.
Provides a
complete
explanation of
the law, fully
supported by
authority, with
no errors.
Paper does
not correctly
apply law to
the facts and
/ or applies
incorrect law.
May be
descriptive,
rather than
putting
forward a
reasoned
argument.
Poor,
inconsistent
or inaccurate
use of Style
Guide.
Poorly
structured.
Inadequate
Makes a basic
attempt to
apply the law
to the facts,
but applies
wrong law and
/ or contains
significant
errors in the
application.
Applies the
law correctly
to most issues
arising from
the facts, but
with some
errors.
Applies the law
correctly to the
facts so as to
address all
issues, with only
minor errors.
Applies the law
to the facts so as
to reach a correct
conclusion on all
issues, with no
errors.
Limited or
inconsistent
use of Style
Guide. Some
attempt at use
of ILAC model
and at
structuring of
Adequate use
of Style
Guide, with
some errors
or lapses.
Uses ILAC
model and is
clearly
Uses Style Guide
accurately and
with only
minimal errors.
Uses ILAC
model. Well
structured, with
one main
Uses Style Guide
comprehensively,
accurately and
consistently.
Uses ILAC model.
Extremely well
structured and
organised, with
Prepared by Ana Torres Ahumada (LAW110).
Written
expression and
editing.
or no use of
paragraphs.
May have
disregarded
the ILAC
model.
answer.
structured.
argument
introduced per
paragraph.
Poor
grammar,
spelling and/
or
punctuation.
Paper gives
no evidence
of having
been proofread.
Significant
spelling,
grammar and
punctuation
errors but the
paper is
readable and
demonstrates
some attempt
at
proofreading.
Uses
appropriate
academic
writing which
is formal and
impersonal,
with a few
spelling,
grammar and
punctuation
errors. Paper
demonstrates
evidence of
proofreading.
Uses
appropriate
academic
writing which is
formal, and
impersonal with
only very minor
spelling,
grammar and
punctuation
errors. Paper
demonstrates
careful
proofreading.
one main
argument
introduced per
paragraph,
supported by
well-written
supporting
sentences.
Uses appropriate
academic writing
which is formal,
impersonal and
which contains
no spelling,
grammar and
punctuation
errors. Paper
demonstrates
careful
proofreading.
FeedbacK and Grade:
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Prepared by Ana Torres Ahumada (LAW110).
Part E
You will be given access to Ana’s comments and feedback on the paper through the forum.