Scenario

Audrey wanted to start a business selling flowers and pot plants.  She found a suitable vacant shop in Hurstville and entered a lease with Byron, the owner of the shop.  The shop was located next to a busy shopping mall and the main reason Audrey chose this shop was because of the high volume of pedestrians passing the shop on the way to the shopping mall  The lease term was for five years commencing on 1 March 2017 at an annual rent of $20,000 payable monthly in advance.  Before signing the lease, Audrey asked Byron, the shop’s owner, if he was aware of any plans which might cause an interruption to the pedestrian access past her shop.  Byron said he was unaware of any plans, but it was up to her to make her own inquiries.  

Without making her own inquiries about possible council plans which would disrupt the pedestrian access to the shopping mall, Audrey signed the lease.  After successfully running the florist shop for about a year, Audrey was upset to find a sign on the road outside the shop stating that the local council intended to widen the road outside the shop and that the pedestrian footpath would be closed and pedestrians diverted to access the shopping mall by an alternative route.  Upon contacting the council Audrey was told the road widening would commence on 1 April 2108 and finish in approximately 12 months’ time.

Audrey, realizing that her business would suffer for the 12-month period, approached Byron and asked if he would halve the rent for the period from 1 April 2018 to 30 March 2019.  Byron agreed but did point out he had made no representation about the road widening.  The road widening was completed on 1 April 2019 and pedestrian access outside Audrey’s shop re-opened.  When Byron noticed that Audrey’s shop was attracting the large volume of customers she enjoyed before the road widening, he demanded that she pay the full rent, both for the period from 1 April 2018 to 30 March 2018, and for the remainder of the lease term (that is, until 30 February 2022) 

Question 1

Discuss, in a problem- solving format, whether Audrey is required to pay the full rent as demanded by Byron.

Your answer should be based on the common law of contract, specifically consideration and promissory estoppel.

Steps to be followed 

1. Issue

Introduction:  Give a brief statement about the area or areas of contract law:  Promissory estoppel may apply when there is an absence of consideration.  Also, a person who has been taken advantage of because of a special disadvantage may have an action against the other party for any damage that has been suffered as a result of the other party’s unconscionable conduct.

(Issue 1) What is the nature of promise in this scenario?  Was the promise made to the other party without the other party providing consideration for the promise.  If no consideration has the innocent party suffered a detriment because of their reliance on that promise?  

(Issue 2) At the same time has the person who made the promised acted unconscionably to the other party by taking advantage of the other party’s special disadvantage? 

2. Rules

 (Issue 1) First, is consideration present?  So, what are the rules about consideration?  For example, consideration must be enough.  If a promise has been made and no consideration provided by the party to whom the promise is made, can the innocent party argue that promissory estoppel applies?  (Central London Property Trust v High Trees).  What are the necessary elements to establish promissory estoppel (Walton’s v Maher)?  For example, has the innocent party relied on the promise to their detriment?

(Issue 2) Second, is there evidence that the person to whom the promise was made suffered under a special disadvantage or disability(eg lack of education, poor English fluence etc)? If so does that innocent person have the right to seek a remedy because of the other party’s unconscionable conduct (CBA v Amadio).

In the above cases has the court ruled that promissory estoppel was established (Issue 1) or that unconscionable conduct was established (Issue 2).  Based on the facts why did the court make this decision?

(Note:

Cases: In this guide the case names are given in brackets.  In your assignment a brief explanation should be given about the facts of the case and the court’s decision.

Referencing: In what textbook or other legal commentary did you find these rules and cases?  Give in- text reference to these resources and include them in your reference list. Also did you find a journal article with commentary about promissory estoppel or unconscionable conduct (eg has promissory estoppel overcome the strictness of the rules on consideration).  Give reference to this journal commentary.)

3. Application

Here you are applying these rules and cases to the facts of the question.  Go back to your rules:

Give an answer to the issues raised in your issue section:  do you think that promissory estoppel and unconscionable conduct apply 

4. Conclusion 

Did you reach a conclusion in your application section?  Here repeats that conclusion but wording it slightly differently so that you state that your conclusion is based on your application of the rules to the facts of the scenario.

Question 2

Assume that the facts in the scenario are varied as follows:

Audrey is a twenty- year old who has completed a TAFE floristry course but has never owned a business before. Before signing the lease, Audrey asked Byron if he was aware of any proposals that would affect the pedestrian flow past the shop. Byron was a successful businessman in the Hurstville area and had previously served as a counselor on the local council.  Byron was in fact aware that council intended to widen the road outside the shop and that this would take approximately one year.  Previous applicants for the lease had found out about the road widening and decided not to go ahead with the lease of Byron’s shop.  The shop had been vacant for 6 months because of this, so when Audrey approached Byron, he was desperate for her to enter into the lease.  Byron therefore did not disclose to Audrey that he was aware about the proposed road widening.

Discuss, in essay style, what section or sections of the Australian Consumer Law may have been breached by Byron.  Explain some of the legal, ethical and business implications for Byron should a court find these sections of the ACL to have been breached.

Steps to be followed:

Question 2

• The required text (and /or a similar recommended business law text)

• Four ACL cases

• Commentary from the ACCC website 

• A journal or media article

1. Introduction

Give a brief statement about the Australian Consumer Law:   Where is it found and what body administers this law?  Why is this act relevant to the scenario? Include general discussion on the aim of the legislation – how a consumer is protected against unfair practices such as misleading or deceptive conduct, false representations and unconscionable conduct. 

Use headings to cover the possible sections you have identified:

2. Misleading or deceptive conduct and unconscionable conduct

What is the relevant section?  How has this section been interpreted in cases or by the ACCC?  

a) Is the conduct in trade or commerce? 

(Case example:)

b) What amounts to conduct?

(Case example)

c) What amounts to misleading or deceptive conduct?

(Case example:)

3. False representation (regarding employment)

What is the relevant section?  How has this section been interpreted in cases or by the ACCC ()? 

4. Unconscionable conduct

What is the relevant section? How has this section been interpreted in cases or by the ACCC?

 (Case example:)

 (Note: Referencing: In what textbook or other legal commentary (or website such as ACCC) did you find commentary on these sections and cases about the sections?  Give in text reference to these resources and include them in your reference list. Also did you find a media or journal article with commentary about these sections and cases based on breach of these sections? Give reference to this media or journal commentary.)

5. Conclusion 

What is your overall conclusion?  Based on your discussion under the headings ‘misleading or deceptive conduct’, ‘false representations’ and ‘unconscionable conduct’, 

Instructions

1. Question 1 is to be answered on the common law of contract.  A problem-solving structure such as IRAC should be used.

Question 1 is to be answered on the common law of contract and specifically consideration and promissory estoppel.

2. Question 2 is to be answered on the Australian Consumer Law (in the schedule to the Competition and Consumer Act 2010 Cth).  Essay style should be used.

Question 2 is to be answered on the Australian Consumer Law.  You will see that the scenario has been changed for question 2 so that the issue is not promissory estoppel but misleading or deceptive conduct (18) and unconscionable conduct (s20) under the ACL.

3. The main legal issues in question 1 are based on consideration and promissory estoppel.

The main sections of the Australian Consumer Law (ACL) for consideration in question 2 are misleading or deceptive conduct (s18) and unconscionable conduct (ss20-21) Other related sections might also be used. 

4. As a rule the following are expected as minimum references:

6. Introduction

Give a brief statement about the Australian Consumer Law:   Where is it found and what body administers this law?  Why is this act relevant to the scenario? Include general discussion on the aim of the legislation – how a consumer is protected against unfair practices such as misleading or deceptive conduct, false representations and unconscionable conduct.