Q3. George is 73 and in the mid-stages of dementia. His wife, on whom he had relied for many years, died some three years ago. He owns his home outright—that is, there is no mortgage on it—and it is currently valued at $450 000. George receives a war widower’s pension and has a number of small investments that, all up, bring in about $400 a week. He is completely reliant on his daughter, Lily, for all his needs. Lily convinced George to approach Easy Finance Company and enter into an agreement with them to borrow $60 000. She told him that the money was needed for an operation on his grandson, but it was actually for a business venture that Lily wanted to enter into. She told George that she would handle the documentation and the loan repayments once the money was approved, and that he was not to worry. George duly made an application to the finance company with the help of Lily, who filled out the entire application. After Easy Finance investigated his financial background, it approved his loan on the basis of his ownership of his house. A first mortgage was taken out over the property as security. When George attended the loan company’s office with Lily, an employee told him that as the loan was for less than $100 000, it wasn’t necessary for him to consult a solicitor. Therefore, there was no need to take the papers away to read or to get independent advice on them. Further, Lily told him that she had read through the documents, and that there was 11 nothing to worry about. George was not told what would happen if Lily failed to make repayments on the loan, nor did he think to ask. The repayments on the loan—that is, principal plus interest—are $2000 per calendar month and in fact exceed George’s monthly pension entitlements. Three months into the loan, Lily defaulted and Easy Finance is now threatening to sell George’s house. Advise George, considering both the common law position and the statutory position.IRAC
answer this way
· Identify the issues that need to be addressed in the question
· State the legal principle/rule that applies to the issue and its source (legislation, case law)
· Apply the legal principle to the particular factual circumstances.
· Note: sometimes stating the rule and applying the rule can become intertwined. This is fine, so long as you remain clear and logical in your approach.
· After applying the legal principle/rule to the factual circumstances discuss what outcome will result
· If there is no clear answer, state which outcome is most likely and why.
Issues that need to be addressed. The capacity of George to enter into contract with the finance company.Who is the legal bearer of the loan?The action that should be taken if there is a default….