Reference no: EM13500886

Question 1:

Norm is a successful accountant and his wife Wendy is a successful real estate agent. Wendy owns a number of highly desirable commercial properties.

Recently Norm has let Wendy know that he is very interested in certain office premises which Wendy owned in Bigtown and in which Norm thought was perfect for him to relocate his accounting practice. The suitability of the building for Norm's purposes was discussed briefly and, after Wendy indicated that she was probably "willing to sell for about $600,000", Norm mentioned that "he would think about it".

The most recent valuation (accepted by all parties) showed that the premises were in fact worth $800,000.

The next day at the office, Wendy wrote to Norm the following letter:

23rd
June 2014

Dear Norm

I refer to our recent discussion in relation to the purchase by you of the whole of my property situated at 2 Overit Street, Bigtown.

I hereby offer to sell you my Bigtown property for $650,000.

I look forward to receiving your prompt acceptance.

Yours Sincerely

Wendy.

The letter from Wendy was mailed that evening and it was read by Norm at his office the next morning in the course of his perusal of the incoming mail. Norm was delighted with the offer and immediately typed up a response in the following letter:

24th
June 2014

Dear Wendy

I refer to your letter dated 23rd June 2014 offering to sell me your property at Bigtown for $650,000.

I accept your offer.

Yours Faithfully

Norm

Norm's letter was posted at 5pm that evening.

At 5.30pm that evening Wendy received a telephone call from Lachlan Purdoch, a wealthy international banker, who advised that he was aware that Wendy owned this building at Bigtown and that the building was perfect for him. He there and then offered Wendy $2 million for it and also a free overseas holiday with him to Paris if she accepted.

Wendy had always been infatuated with Lachlan since she knew him from school and without thinking about the discussions and letter she had sent to Norm earlier, she accepted there and then thinking "this is just too good an offer to refuse".

(i) Advise Wendy, Norm and Lachlan, quoting relevant legal principles, as to who is entitled to purchase the Bigtown property on these facts.

(ii) Would your advice in (i) differ if Wendy's letter to Norm included the following paragraph?

"This offer and any agreement reached between us is on the basis of it being subject to a formal contract drawn up by my solicitor".

(iii) Would your advice in (i) differ if Wendy's letter included the following paragraph?

"I require verbal confirmation of your acceptance of this offer in person and will not accept anything less."

Question 2

Kevin and Betty had a five year written signed lease of a shop in the Welcomed Park shopping centre which is located some 30 kilometres north west of Adelaide. The lease was entered into at the end of 2011 with the lessor (M Pty Ltd) and required a weekly rental payment of $1,000.

In 2012, Kevin and Betty's business was badly affected by a general economic downturn. As a result, in January of 2013 Kevin and Betty approached M Pty Ltd to ask for a reduced rental of $600 per week until the business improved. They both told M Pty Ltd about the business problems and indicated that if the landlord did not agree to this reduced rent that they might have to terminate the lease early as they could not afford to pay more. To avoid this early termination of lease M Pty Ltd agreed to allow Kevin and Betty to pay the reduced rent from January of 2013 but only until their business improved at which time they would be required to pay the former rent of $1,000 per week.

In December of 2013 M Pty Ltd decided to sell the Welcome Park shopping centre including all of the shops. M Pty Ltd wanted the income from the shopping centre to look good and so M Pty Ltd asked Kevin and Betty to start paying the full amount of rent of $1,000 per week from January 2014. M Pty Ltd also demanded that Kevin and Betty pay the arrears rent (the ‘shortfall' rent of $400 per week) for each week of 2013.

Required

You are required to advise both Kevin and Betty and M Pty Ltd as to any possible legal arguments they may have in connection with this dispute and as to who is likely to win the dispute.