Commercial and Corporations Law

Commercial and Corporations LawAlan a retired carpenter and Bridget a retired caretaker are husband and wife in their 70s. They were migrants from Russia who came to Australia in 1956 and have two children, Carlos and Doris, both were born and educated in Australia. Both Alan and Bridget have no formal education and both have very limited co mmand of English. In the past, most of the important documents have been translated for them by their child ren or by qualified translators. They have worked hard during th eir working lives and they own a modest family home in Victoria that has a current market value of about $400,000.Property Division Pty Ltd is in the business of buying properties and subdividing them into smaller plots to re-sell them with profits. Carlos is a director of the company. The company has been operating successfully in the past 10 years. However, in recent years, property market has dropped in value and there is now less demand for smaller plots further out from Melbourne CBD. Carlos is finding it difficult to re-sell the s ubdivided propertie s as quickly as he has hoped for, and in the meantime the interest payments on the loans that the company has with East West Bank are escalating and the company often falls behind in the repayments to East West Bank that has repeatedly sent letters of demand for payments. Carlos approaches Bruno who is a friend and a finance manager at East West Bank for assistance. Bruno suggests refinance as a way of getting out of bank troubles and says that his parents can be the guarantors and they can use the hom e they own to take out a further mortgage.Over dinner, Carlos explains to his elderly parents and his sister about how successful his property subdivision business is and that he needs a little help to expand his business and this would take about 12 months. The elderly parents seem happy that their son is doing well in business and so they agree to provide him w ith $30,000 as requested as a way of assisting him to expand his business and agree to sign the guarantee and the mortgage document. Bruno is mostly quiet during dinner, except that he walks away a couple of times to answer his mobile phone. Bruno then presents the documents for the elderly couple to sign, he says to Alan and Bridget that they should take a few days to read through the documents, think it over and ask for professional advice from someone else if necessary. Nothing more is said about this until after the dinner when Alan and Br idget say that they do not need to think it over as their son is doing well in business and they have known Bruno since he was a child.One and half years later, Property Division Pty Ltd goes into receivership. The company owes the Bank about $150,000. East West Bank now attempts to enforce the mortgage and the guarantee against the elderly couple.Advise Alan and Bridget. Explain with clear and full reasons as to whether they have a strong claim against East West Bank. (15 marks):

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