LAW340 - Glenn has a Bar in Sydney - Law Assignment Help

Assignment Task

Glenn has a bar in Sydney. It is located in a very low socio-economic part of the city which has an unemployment rate amongst the highest in the country. A substantial percentage of the local population have great difficulty in reading and writing English. The vast majority of Glenn’s clientele are from these sections of the community, and therefore nearly all of Glenn’s customers rely on Centrelink payments [government welfare payments].
These welfare payments are paid fortnightly on a Thursday. Glenn has noticed that as a result, his takings across the bar fall away dramatically in the week immediately prior to the next payment, as so many of his customers have spent all their welfare payment and therefore cannot pay for alcohol This presents a problem for Glenn as he is aware that a sizeable proportion of his clientele are alcoholics who are desperate for a drink, and therefore they continually ask for credit.
In order to increase his takings (and profits) in this ‘off week’, Glenn introduces his “Drink now, Pay later” scheme. Under this scheme, patrons may open an account and charge their alcohol purchases for payment at the end of each month. Patrons are required to sign a written contract which contains, inter alia, the following clause:
Both parties agree that notwithstanding anything else contained in this contract, all alcohol purchases must be paid for at the time of purchase. However provided the
borrower observes all terms of this contract the lender will allow the borrower to pay off the loan at the end of every calendar month. The minimum monthly installment shall be $250.00 (or the amount due and payable if less than $250.00), plus interest of 29%.
In the event the borrower misses one payment the entire amount owing shall be immediately due and payable. In addition, a one-off ‘processing fee’ of $500.00 shall
apply, and a “default fee” of twenty dollars ($20) for each day payment is late shall also apply.
Another clause of the contract states as follows:
By signing this contract I acknowledge that I have read and understood all the terms contained therein. I equally acknowledge that I agree that the interest rate and default
payments as articulated in the contract represent a genuine pre-contractual estimate of the loss to be suffered by Glenn in the event of my default.
Glenn requires all his “Drink now, Pay later” clients to sign the contract which they all do. Most sign the contract without reading it and the few that do attempt to read and understand it generally say something to the effect that “it is full of legal mumbo-jumbo”. Glenn’s response to this is to the effect that if they want a drink they have to sign it, which they do.
Within a few months, hundreds of Glenn’s customers are in debt to him. Many of the customers owe thousands of dollars. They have little or no hope of paying their accounts and every day are incurring interest at 29% and a daily ‘default fee’ of $20.00 as well as the one-off ‘processing fee’.

A group of Glenn’s customers seek your advice. Advise them of their position in equity. You should also briefly mention of any relevant statutory provisions that may be relevant.

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