Sara v Adam [2010] NSWDC 271

Sara v Adam [2010] NSWDC 271

The guarantee was supported by consideration because the plaintiff extended the time for Arteria Property to repay the debt to 16 February 2009 contemporaneously with the varied agreement. However, the guarantee was unjust under the Contracts Review Act 1980 in both a substantive and procedural sense: it imposed liability for debt inflated by extreme and unconscionable interest rates, and it was obtained from the defendant without dealings, negotiation, explanation or independent legal advice, in circumstances where the plaintiff was unconcerned how her agreement was procured and the defendant felt intimidated. The appropriate relief was to declare the guarantee void in whole from the...

Jurisdiction
Australia
Judgment Date
28 September 2010
Procedural Posture
Civil Proceedings Concerning Recovery Under a Contract of Guarantee and a Contracts Review Act 1980 Cross Claim / Judgment After Hearing on the Plaintiff's Amended Statement of Claim and the Defendant's Cross Claim
Outcome
The defendant succeeded on the cross-claim under the Contracts Review Act 1980; the contract of guarantee was declared void in whole from the time it was made, and the plaintiff's amended statement of claim was dismissed with costs.
Legal Topics
['contract of Guarantee' 'unjust Contract' 'contracts Review Act 1980' 'consideration' 'substantive Unfairness' 'procedural Unfairness' 'exorbitant Interest Rates' 'independent Legal Advice']
['contract Law' 'consumer and Commercial Law'] ['contract of Guarantee' 'unjust Contract' 'contracts Review Act 1980' 'consideration' 'substantive Unfairness' 'procedural Unfairness' 'exorbitant Interest Rates' 'independent Legal Advice']

Case Brief

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Procedural Posture

Civil Proceedings Concerning Recovery Under a Contract of Guarantee and a Contracts Review Act 1980 Cross Claim / Judgment After Hearing on the Plaintiff's Amended Statement of Claim and the Defendant's Cross Claim

Legal Issues

  1. 1 ['Whether the contract of guarantee was unenforceable for want of consideration.' 'Whether the contract of guarantee was unjust in the circumstances relating to the contract at the time it was made under s 7 of the Contracts Review Act 1980.' 'What relief should be granted if the contract of guarantee was unjust.']

Ratio Decidendi

The guarantee was supported by consideration because the plaintiff extended the time for Arteria Property to repay the debt to 16 February 2009 contemporaneously with the varied agreement. However, the guarantee was unjust under the Contracts Review Act 1980 in both a substantive and procedural sense: it imposed liability for debt inflated by extreme and unconscionable interest rates, and it was obtained from the defendant without dealings, negotiation, explanation or independent legal advice, in circumstances where the plaintiff was unconcerned how her agreement was procured and the defendant felt intimidated. The appropriate relief was to declare the guarantee void in whole from the...

Court Disposition

The defendant succeeded on the cross-claim under the Contracts Review Act 1980; the contract of guarantee was declared void in whole from the time it was made, and the plaintiff's amended statement of claim was dismissed with costs.

Orders

  • ['Declare that the contract of guarantee made between Edward Sara and Nadia Adam as set out in the document dated 2 February 2009 entitled "Acknowledgment of Debt and Repayment of Loan/Debt Agreement and Guarantee" is void in whole from the time when it was made.' 'Statement of claim, as amended, is dismissed.'...