Read the article ‘Operating with Impunity’ and discuss the article in relation to credit analysis and lending management.
argued that the fiduciary principle is stronger than the good faith doctrine in that it gives primacy to the interests of the party to whom the fiduciary obligation is owed. The good faith doctrine is concerned with those who contract and are on an equal footing. The principle of good faith also finds ground in the doctrine of “unconscionable bargaining”, this is the situation where relief is granted when a transaction, is so unconscionable that it cannot be allowed to stand. The requirement is thus that there exists an unconscientious taking advantage of the serious disability or disadvantage of the person in the inferior bargaining position by procuring or retaining the benefit in question in a way that is both unreasonable and oppressive . . In Australia, unconscionability has been relied upon as a ground in relieving a purchaser from forfeiture of his equitable interest under a contract of sale pursuant to a notice making time of the essence of the contract leading to rescission of the contract . Once relief against forfeiture was available specific performance of the contract could be ordered. The purchaser had gone into possession under the contract and erected a house on the land but was unable to pay the balance of the purchase price on the due date. This approach was taken further in the case of an instalment contract for the sale of land under which the purchasers had been let into possession, though they were not entitled to possession until completion, and had built a house on the land . Again, the contract had been rescinded, this time for non-payment of an instalment. In this instance the majority likened a terms contract to a mortgage, the forfeiture provision being by way of security for the payment of the purchase price so that there was no need to establish unconscionable behaviour of an exceptional kind. In Australia, the emergence from the shadows of this ground of equitable relief has relegated the doctrine of undue influence to a position of relative unimportance. Unconscionability and undue influence overlap, the latter being more limited in scope, concerned as it is with the exercise by the contracting party of an independent and voluntary will. Perhaps the most important notion of good faith can be found in the law of restitution which transcends the traditional common law causes of action and equitable grounds for relief. General principles are being articulated and refined which may apply indifferently, whether the basis of the claim has its origins at common law or in equity. In Lipkin Gorman v. Karpnale Ltd , it was acknowledged that the underlying principle governing the>GET ANSWER