TLAW401 - JB HI-FI Group is the largest home entertainment retailer company and the most PDF

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JB HI-FI Group is the largest home entertainment retailer company and the most trusted retail brand in Australia. It was established in Melbourne in 1974, which gradually holds hundreds of physical stores spread over Australia and New Zealand. JB HI-FI was successfully listed on the ASX on October 2...

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OVERVIEW Penny, after completing her higher studies, she planned to set up her own business. To start her own new tax advisory business, she acquired a store at lease from her own aunt, Mrs. Havealot at a discounted rate. The store was used as a local pizzeria before. Penny asked for a copy of the lease document so that she can sign and secure the property for her use. But her aunt said that you can start renovations and my solicitor will email you the lease document for the signature. She trusted her aunt and completed the renovations of the store by spending $45,000. After finishing all the renovation work, Penny still has not received the lease document for signature. When she asked for the lease documents, her aunt replied that there is no written agreement between us, so it is not legally binding. So, she is going to lease the same property to another party unethically. Although, Penny already spent a huge amount of her personal savings for the renovations of the store which can be used for her own business, she does not have any written agreement. So, the major issues are the laws that the Penny can apply to her aunt for the breach of contract and to overcome the compensation. CONDITIONS, CONSIDERATION AND PROMISSORY ESTOPPEL A contract can be done orally. Oral contract is a simple contract where a party depends upon the spoken words and the given promise of the next party. In this type of contract, consideration is required. Presence of the consideration makes the contract enforceable in case of the oral contracts. The cause of the action of the spoken words and given promise is considered as the foundation for the satisfaction of the court. This contract happens because of the mutual understanding between the parties. Agreements between the family members are known as domestic agreements. It doesn’t intend to create any legal relations. But it can be overturned if the party can be able to show the serious consequences of the agreements. The laws are rebuttable in domestic agreement if one party is able to show the consequences of the agreements. Consideration is the exchange of promises between parties which may include some profits, benefits, shares or interests. It is the vital elements of all simple contracts. Consideration must be sufficient, legal and definite. It may include monetary value as well as non- monetary value. Consideration between the parties make the case enforceable which provides a sufficient proof to recognize the contracts. Promissory estoppel is a legal rule which prevent the innocent party even in the case of lack of consideration. It states that some promises need to be enforced in certain circumstances if it meets the legal criteria. It is a concept where the spoken word or promises cannot be taken back. So, it helps the innocent suffering party to get the legal remedy. It is enforceable even in the absence of the consideration. It allows the party to enforce the promise. In this case, Penny and her aunt has done simple contract i.e. oral contracts. They have done the domestic agreements. Penny was offered a lease by her aunt at the cheapest discounted rate than the market rate for four years. There is not any written agreements between the parties. Penny started doing renovations on the store for her business purpose as she was promised by her aunt that she can run her own business there for four years. She was promised that she will be provided by lease date and copy of lease documents to be signed by

her to secure the property which was not provided by her aunt till the end of the renovation work. So, the promise made by her aunt can be legally enforceable regarding the concepts of consideration and primary estoppel in the absence of written contracts as well. AGREEMENT Similarly, the major elements of the agreement are offer and acceptance. Offer is an invitation to a person to enter the agreements or contract. It is the mutual agreement between the offeror and offeree. It is an agreement based on the certain terms and conditions. It supplies the information about the goods and services to the offeree. Penny is an international student who completed her post graduated education from the university. She was interested to work as a professional tax advisor. She shared her plan with her aunt. Her aunt was to ready to help her and she provided her property which was vacant from the last two years. She was agreed to lease her property to Penny for four years at a discounted rate that is below the market rate. Penny asked her aunt for the lease document to secure the property and her replied that her lawyer will send her the document and Penny did not need to worry as she is the family members. Oral agreements had held between both the parties as her aunt was trustworthy to her. But her aunt was about to lease the property to the third party after the completion of renovations by Penny. A valid offer was made by her aunt to lease the property by mentioning that the rent price will be discounted and cheaper than the market price and the store will be given to her as a lease at certain discounted rate for four years. Penny trusted her aunt and accepted the offer and did all the renovations of the store. Penny trusted the oral contracts and did the renovations, but her aunt refused to give the property to her after all her investments on the renovations of the store. CAPACITY The contract must be voidable to be enforceable by the law. Both the parties on this case are enforceable by the law and there were no chances of the void. This case doesn’t meet any medical conditions like illness, mentally disabled, criminal records, drunk, intoxicated and misled on any of the party. The contract was done in presence of mind with the offer, acceptance and consideration of the leasing of property and paying of the rent at certain price for the provided years. It proves that both the parties are capable to perform a business transaction according to the law. This case can be solved using the reference of case law. Let’s taken a case example of Waltons Stores. The case was held between Waltons Stores Ltd v Maher. Walton Stores (WS) negotiated with Maher for the lease of the property owned by Maher1. The agreement was about the construction of retail commercial premises according to the requirements of WS which will be occupied by WS, in return WS would get the property for lease for 12 years. Maher started renovations based on the oral agreements between them. The lawyers of both the parties were finalising the lease documents including the renovations agreement. Maher vis his solicitors sent the signed documents to the solicitors of WS. WS didn’t instruct his solicitors to sign the lease documents. So, there was the failure of the exchange of contracts. WS changed their mind about the lease of the property and informed Maher about their 1 Walton Stores Ltd v Maher (1988) discussed in Latmier P, Australian Business Law (33th ed, Oxford, 2014) pp. 485.

change of mind after the completion of 40% renovations. Evidence proved that that WS was aware about the progress of the renovations. Maher sued WS for the breach of the contract. Court held and stated that Maher could not rely on promissory estoppel to enforce the agreement2. This case shows that promissory estoppel can only be applied to the situations where the parties are not in contractual relationships before. Another case of promissory estoppel was the case held between Central London Property Trust ltd v High Tress House Ltd (1947)3. P rented a house to D for 99 years. When the second world war broke out, P agreed to halve the rent of the house until the end of war to D without any consideration from D. After the end of the war, P claimed for the full amount of rent from 1940 with D. Court held and the case recognised that the promise was enforceable as it creates the legal relations. Although, there was not any consideration for the promise. That promise presented the term estoppel. The agreements between Penny and her aunt is domestic agreement. Domestic agreement generally does not intend to create legal relations, but it can be rebuttable if the consequences are serious to one party. The legally bounded domestic agreements can be illustrated by the case of Wakeling v Ripley (1951). D called his sister and her husband from England to Sydney to share his house and to care him 4. P’s husband did a big sacrifice i.e. he left his good job and gave up his pension and highly awarded salary. After D changed his mind and sold his estate (house and property). P sued D for the breach of contract. Court held and P won in the claim of breach of contract. The presumption that domestic agreements do not intend to create legal relations was rebutted because of the economic seriousness occurred to P after the agreement. CONCLUSION Several aspects required for the formation of contract and are fulfilled lawfully in this case. Although, the contract is oral, and consideration is present in the contract. In this contract, the court must feel actual persuasion of its existence. Penny’s aunt had promised her the store for four years at a discounted rate. By her word, Penny started to do renovations of the store. For the renovations, Penny used all her savings. So, in this case domestic agreements are rebuttable and seems to be enforceable. The promise made by her aunt was intended to create the legal relations between them because promiser knew that promisee would act upon the promise. Oral contract had done between the parties, but the offer made to Penny by her aunt and the acceptance of the offer by Penny made a consideration. That creates a relation that assist to form a contract between the parties. Therefore, promissory estoppel allows Penny to sue her aunt Mrs. Havealot for the legal enforcement of the law as the contract was made but later, she got cheated by her aunt.

2 Campbell, J. (2019). Waltons v. Maher: History, Unconscientiousness and Remedy - The 'Minimum Equity'. [online] Papers.ssrn.com. Available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2408289. 3 Central London Property Trust Ltd v High Trees House Ltd (1947) discussed in Latmier P, Australian Business Law (33th ed, Oxford, 2014) pp. 485. 4 Wakeling v Ripely (1951) discussed in Latmier P, Australian Business Law (33th ed, Oxford, 2014) pp. 090.

REFERNCES

Campbell, J. (2019). Waltons v. Maher: History, Unconscientiousness and Remedy - The 'Minimum Equity'. [online] Available at: Papers.ssrn.com. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2408289 [Accessed 7 August 2019].). Latimer, P, Australian Business Law (33th ed, 2016, Oxford University Press)....