QUESTION 1

P makes car parts but the closure of the car manufacturing industry in Adelaide has badly affected his business and P is finding it difficult to make rental payments for the factory that he leases from N. P was looking to other markets into which he could sell car parts.

In February 2017 he told N that he was having difficulties paying rent and said “You already have factories you cannot lease and if you do not reduce my rent you may have one more. Would you consider reducing my rent by half? N agreed to do so until P’s business improved.

One year later, P’s business had not improved. By this time, N’s business was also experiencing financial difficulties and so he demanded that P pay full rent from March 2018, as well as arrears, explaining that he needed all the money to retain ownership of the factory premises. P has refused N’s demands.

Please discuss the legal arguments for the settlement of this dispute and assess how it would be decided by the courts.

Please note: Your answer does not require a detailed analysis of the principles of offer, acceptance and intention to form legal relationships.