Case 5:

Issue: In this case two parties are involved, Plentiff Mrs Smith 72 -year-old widow who owns a freehold
hourse and Defendant Mr Jone, whos taken as a lodger by Mrs Smith. She soon entrusted him and let
him handle her financial affair. Later on, she found out that he had been prisoned for 10 years in the
case of theft. After a span of two years at the house of Mrs Smith, he persuaded her to tranfer one third
of the share of the house to him. She did tranfer despite knowing of the theft case. Next, Mr Jones
wanted to start a business but he was unable to raise the required start-up capital on his own, he again
pursudaed Mrs Smith to put her remaining two third share of the house as security against a bank in his
favour. She signed the documents at the bank in the presence of Mr Jones for the bank loan. Seven
months later, Mr Jones business went to bankrupcy, and he is no longer able to make payment on the
bank loan. .Whether she is able to sue against Mr Jones for the damages?

Relevant Case Laws: Donoghue v Stevenson(1932); Commericial Bank of Australia v Amadio(1983)

Application: Based on the case study mentioned above, Mrs Smith may be liabe for her damages as she
could have reasonably researched about his past life before taking him as alodger in her house. In this
scenerio, she may be liabe as she has breached the duty of care as in the case of Donghue V Stenvenson.

The facts involved Mrs Donoghue drinking a bottle of ginger beer in a caf in Paisley,
Renfrewshire. A dead snail was in the bottle. She fell ill, and she sued the ginger beer
manufacturer, Mr Stevenson. The House of Lords held that the manufacturer owed a duty of
care to her, which was breached, because it was reasonably foreseeable that failure to
ensure the product's safety would lead to harm of consumers.
I second scenario, it seems that Mr Jones may take advantage over weaker party as she is a widow and
its a possibilty that she may not be aware of the banking system. Mr jones may have not explained to
her about the cosequeces of loan if it is not returned back on time. Based on CBA v amadio, Mr Jones
can be personally liable as he tried to took advantage over widow Mrs Smith, signing for the necessary
documents for the bank loan.

unconscionable conduct' is usually taken to refer to the class of case in which a party makes
unconscientious use of his superior position or bargaining power to the detriment of a party who
suffers from some special disability or is placed in some special situation of disadvantage."[1]
What distinguishes unconscionable dealing from undue influence is that in unconscionable
dealing "advantage is taken of an innocent party who, though not deprived of an independent
and voluntary will, is unable to make a worthwhile judgment as to what is in his best interest.

The Respondents [Amadio] signed a mortgage for the Appellant [Bank of

Australia] to secure loans for their son.
They were not well informed about the details of the mortgage, and clearly had no
idea what's going on.
They were both Italian and spoke very little English, being pretty much illiterate.
When the Appellant attempted to seize the house, the Respondents attempted to
challenge the validity of the of the mortgage
An elderly Italian migrant couple, Mr. and Mrs. Amadio stood as guarantors against their sons loan for
his construction business from the Commercial Bank of Australia. The bank manager, Mr. Virgo, who
was in close communication with the son, Vincenzo Amadio, had better understanding of the business
reality and knew that the son had probably misrepresented facts in a bid to get his parents to stand as
guarantors. Subsequently, when Vincenzo Amadios business failed, the bank was required to enforce
the guarantee by mortgaging the building owned by Amadios.

In coming to their decision, the Court took into consideration the special disadvantage suffered
by the Amadios as a result of their minimal ability to speak English, lack of formal education
and business experience, and old age. This special disadvantage suffered in conjunction with the
failure of the bank to disclose the necessary facts that would allow the Amadios to make their
own informed judgment about the transaction was held to amount to unconscionable
conduct. Ultimately, the Amadios would not have signed the documents, had they been aware of
the effect of the terms they were agreeing to.

In cases of unconscionable conduct, the court will focus on the bargaining power of the parties
and in particular that of the stronger party and their conduct. The onus of proof will be upon the
stronger party to show that the transaction was fair, just and reasonable. If the stronger party is
unable to bear proof that the transaction was fair, just and reasonable, their conduct will be held
to have been unconscionable and the transaction will be set aside.

Conclusion,Mrs Jones has done necessary search research before choosing Mr Jones for managing the
business.She can be responislbe personally as she breached the duty of care.Mr

Jones in the second scenerio of the case may be accountable for the uncosciousable conduct where she
took advatge over weaker part Mrs Smith