An unconscionable dealing can be described as the unconscientiously using superior position to the detriment of the other party suffering from a disability or when the party is in anexceptional position of disadvantage. Therefore, such dealing takes place when as a result of some circumstance or condition, one party has been placed at a special disadvantage as compared to the other party and the other party takes an unfair or unconscientious advantage. There are several elements that need to be established in this regard. The special disability is not a mere inequality but it involves impaired judgment. Similarly, taking advantage involves the knowledge of disability, procedural or substantive unconscionability. The other party should have entered into the contract as a result of the unconscionable conduct.
The notion of “unconscionability” was firmly established by the decision of the High Court given in Blomley v Ryan and it was strengthened by the decision of the High Court given in the case titled ‘Commercial Bank of Australia Ltd v Amadio’. Therefore, according to the general principle, when, asa result of some condition or circumstances, one party is under a special disadvantage and an unfair or unconscientious advantage has been takenby the other party, of the opportunity created by such special disadvantage, in such a case, the transaction can be set aside by the court due to unconscionable conduct.
The facts of the present case are similar to the facts of Commercial bank of Australia v Amadio. In this case also, an Italian couple in their 70s was asked by their son and bank manager to execute a guarantee for their son. However the bank manager had strong reasons to believe that the son had lied to his parents regarding the solvency of his business and he also knew that the parents had very little business experience and they had problems in understanding English language.