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Consideration;Promissory Estoppel




Tutorial Questions;Question 1 (Consideration, Promissory Estoppel);On January 1 2009, Ryan entered into a 5 year lease of a restaurant premises in the central;business district of Southport, Queensland. In 2010, the local council approved a light rail;project. This involved the construction of rail lines which ran past Ryans restaurant.;Construction commenced in the same year on 1 July with completion of the project to occur by;early 2015. The construction works in and around Ryans restaurant and associated traffic made;it difficult for customers to access the restaurant, so much so that sales revenue dropped 60%.;Ryan wanted to quit the lease and if sued for breach of the lease, intended to file for bankruptcy;as he had very few assets other than the restaurant. David, the owner of the premises and;Ryans landlord, did not wish to lose Ryan as a tenant because it was unlikely that David would;find another suitable tenant given the market conditions. With this in mind, David approached;Ryan on 1 January 2011 and entered into an oral agreement with Ryan to reduce the rent from;$15,000 per month (as stated in the written lease agreement) to $5,000 per month. The;agreement did not state the period for which the reduced rent was to be paid. Due to good;weather, the construction of the rail line in Southport was completed early (January 2013). In;fact, business has been very good for Ryan since 1 January 2013, with revenue up 20%;compared to the time just before construction commenced. In response to the improvement in;Ryans business, David has demanded rent in arrears from Ryan claiming that he has to meet;his existing contractual obligation to pay $15,000 per month and that Ryan provided no new;consideration under the verbal agreement to reduce the rent.;Advise David as to whether he can claim from Ryan under common law (consideration) and/or;equity (promissory estoppel);(a) Rent in arrears from 1 January 2011, or;(b) Rent in arrears from 1 January 2013;Question 2 (Consideration);In December 2012, Archie and Bob enter into a written contract whereby Archie agrees to;rebuild Bobs Toyota Supra for $5,000 to be payable upon completion. Archie rebuilds the;Toyota Supra and provides an account for $5,000. Bob advises Archie that he is willing to pay;Archie $3,000 and promises to professionally wash and detail Archies BMW roadster as and;when requested by Archie during 2013. Bob asks Archie whether he would be prepared to;accept this arrangement as full and final settlement for the rebuilding work. Archie agrees and;receives the $3,000. Shortly after receiving the money, Archie asks Bob whether he uses the;Maguires brand of car wash and polish when detailing Archies car. Bob promises Archie that he;will use this brand. In fact Bob uses a different brand of car wash and polish. Archie finds out;changes his mind on the arrangement and decides to sue Bob for the $2,000 on the grounds;that Bob has an obligation to pay the balance and that Bob breached the agreement to use the;Maguires brand of car wash and polish. Advise Archie.


Paper#17869 | Written in 18-Jul-2015

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