• Internal Code :
  • Subject Code : AYN456
  • University : Queensland University of Technology
  • Subject Name : Business and Corporate Law

Case Study: Commercial Malls Pty Ltd

Table of Contents

Issues.

Rule.

Application.

Conclusion.

Reference list

Issues

Breach, termination of the contract, collateral contracts and others are some of the common issues faced within a contract. This assignment will deal with the case between Dick, the CEO of Commercial Malls Pty Ltd (CM) that includes Happy Home Base and Jones, the CEO of Gourmando’s Delight (GD), a tenant of CM’s Happy Home Base (HHB). The issues faced within the case will be the primary focus in this section along with providing legal advice to Jones.

The issues that seem to be underlying in the case presented in the case study involves a breach of contract. It is because, as per the case study, the contract of Jones is likely to expire in February 2020. As per the contract, Dick reminded Jones of the expiry date on November 2020. Besides, as per clause 15.1 (a), the contract also stated that Jones will be liable to continue with the contract with relevant rent on the condition of refurbishing the company as per clause 29.1(a). However, upon showing interest in continuing the business on the particular area concerning the contractual terms, Jones was rejected of the opportunity and Dick responded that Jones have to vacant the premises within the 21 days of notice based on the contractual terms. However, if failed to do so within the 21 days, Jones liable to pay an amount of $10,000 after the date of expiry as per clause 29.1 (c) and (d) of the contract. Therefore, based on the contractual terms, Dick was likely to renegotiate the terms of the contract after the date of contract expiry.

This situation resulted in a second issue within the case. Paying Dick $10,000 leads to the issues of liquidated damages within the case. Based on the contractual agreement, Jones was in the hope of renegotiation of the contractual terms that will provide Jones with the opportunity to continue the business within the area. A sudden change of terms by Dick leads to a shocking situation for Jones thus leading to the issue of liquidated damages within the case.

Rule

Australian Contract Law provides the opportunity to the parties to bargain freely among themselves (Utz, 2015). As per this Australian Law, both the parties within the contract are bound by certain limitations and exceeding the mentioned limitations can result in the breaches of contract. In addition to this, the Australian Contract law also states that both the parties within the contract must be enforced to comply with the legal requirements mentioned in the contract (Consult Australia, 2020). As per the legislation, there are certain elements within a contract. It includes acceptance, consideration, offer capacity and mutuality (Australian Competitors & Consumer Commission, 2020). However, in the current case, it can be noticed that all five elements within the contract have been a mission. It is because Jones and Dick were not mutual regarding the terms of the contract. In addition to this, Dick also does not seem to be considering the offer of Jones in terms of negotiation of the contractual terms. Hence, based on the law, Dick is been responsible for breaching the terms mentioned in the contract.

On the other hand, as per Property law act 1974; the owner of the property possesses the full right of taking any decisions regarding the premises within the property (Legislation of Queensland, 2020). Therefore, as per this act, Dick possesses the full authority of deciding on the rent. However, based on the contractual terms, Dick was likely to provide an extension of the contract based on monthly rents, if Jones refurbishes the shop. Therefore, based on these criteria, Dick seems to breach the contractual terms that can lead to a legal consequence.

Application

The case of Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26, relates to the current case. In the case, it can be noticed that the issues of collateral contract and estoppels lead the case to seek legal advice (High Court of Australia, 2020). In the case, it can be noticed that two premises were given on rent to cosmopolitan by Crown for 5 years. However, based on the contractual; agreement, cosmopolitan was bound to refurbish the area to gain an extension of the contract after 5 years. Based on these criteria, Cosmopolitan seems vacating the place as they fail to refurbish the area. However, a term of Crown used within the contract seems to be drawing the major attention of this case. As per the statement, Crown will look after the tenants in the process of renewal provided in terms of refurbishing (High Court of Australia, 2020). Therefore, both the courts involved in this area of judges rejected the statement not to be a promise. However, they think that the Crown promised the tenants regarding looking after the refurbishing period. Besides, the court also upheld the appeal of cosmopolitan in the grounds of estoppels. Hence, the cross-appeal also leads to the issue of collateral contract in the case. Lastly, the court decided to remit of the issue in terms of estoppels as the case was holding less possibility of making out the arguments of estoppels.

Conclusion

Based on the above-presented case it can be noticed that as per the contractual terms Cosmopolitan vacant the place after 5 years after being not able to refurbish the area. However, a type of promise statement seems to be drawing the major attention and arguments within the case. In this respect to the case of Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26, the current case seems to be providing the vibes of contractual breaches along with the liabilities damages. Therefore, based on the clause in the contract, Jones possesses the legal right of seeking court’s advice in the case. However, based on the contractual terms, ignoring the termination notice can lead Jones to the payment of $10,000 after the expiry date of the contract. In addition to this, complaining against Dick imposing contractual breaches as per the Australian Contract Law policy can help in maintaining the current position. Lastly, Jones possesses the full right of claiming the extra 5 years contractual terms as he seems to be maintaining all the contractual aspects.

Reference list

Australian Competitors & Consumer Commission, (2020). Contracts & agreements, Australian Competitors & Consumer Commission. Retrieved on 15 April, 2020, from: https://www.accc.gov.au/consumers/contracts-agreements

Consult Australia, (2020). AUSTRALIAN CONTRACT LAW, Consult Australia. Retrieved on 15 April, 2020, from: https://www.consultaustralia.com.au/docs/default-source/contracts-liability/Consult_Australia_Response_to_AGD_Discussion_Paper_on_Contract_Law_-_July_2012.pdf?sfvrsn=0

High Court of Australia, (2020). Crown Melbourne Limited v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26, High Court of Australia. Retrieved on 15 April, 2020, from: http://eresources.hcourt.gov.au/showCase/2016/HCA/26

Legislation of Queensland, (2020). Property Law Act 1974, Legislation of Queensland. Retrieved on 15 April, 2020, from: https://www.legislation.qld.gov.au/view/pdf/inforce/2016-09-27/act-1974-076

Utz, C., (2015). Australian Contract Law, Association of Corporate Council. Retrieved on 15 April, 2020, from: https://www.acc.com/resource-library/australian-contract-law 

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