Australian Business Law, Problem-based Assignment (contract)

CLAW1001 Foundations of Business Law Semester 2 2014 Mid-semester Problem-based Assignment Please note Your assignment should be of 1200 words (plus or minus 10 percent) excluding footnotes. A separate list of references is not required (as any references will be included in footnotes). This assignment is worth 30% of your final marks. The assignment must be submitted via the Turnitin link on Blackboard by 5pm on Friday 10 October. Students should be aware that the Turnitin technology is used to detect instances of academic dishonesty (including plagiarism, copying, quoting without referencing, inadequate referencing and so on). Students must have completed the Academic Honesty module prior to submission and should ensure that their assignment complies with the University’s Academic Honesty policy. Referencing in law adopts the footnote style and it is expected that assignments will follow the Australian Guide to Legal Citation. A one page guide to legal citation which complies with AGLC can be found at <http://libguides.library.usyd.edu.au/content.php?pid=160012&sid=1513435>. You will find the 4th reference under the heading “Additional Resources” (“A Useful Quick Guide to AGLC from the University of Queensland Library”) to be a very useful 6 page summary). _________________________________________________________________________________  CLAW1001 Foundations of Business Law Semester 2 2014 Mid-semester Problem-based Assignment Andrew and Brett are both successful businessmen and members of “The Entrepreneurs Club” – a group of successful business entrepreneurs who regularly meet for lunch and fellowship. It was not unusual for deals to be done over lunch. At a recent lunch meeting Andrew, who had made his money in a large chain of fast food restaurants, expressed his frustration at the difficulty he was having finding a suitable facility he urgently needed for food preparation for his restaurant chain. It was very difficult to find suitable premises because of location and accessibility requirements, town planning and food security regulations, fitout costs and unrealistic rents as well as a real shortage of suitable premises. Brett, a very successful property developer, told Andrew that he might have the ideal facility – a large commercial kitchen that seemed to meet all of Andrew’s requirements. The facility was currently leased to one of Andrew’s competitors but the lease was about to expire. Brett explained that he was not intending to renew the lease – he was frustrated by the tough bargaining stance taken by the current lessee, their insistence on what he regarded as unreasonable due diligence, their delaying tactics, their request that the contract be renegotiated and their refusal to agree to Brett’s rental increase demand. Brett’s premises were ideal for Andrew’s purposes and he was happy with the rent that Andrew was asking but he wanted the right to renew the lease upon its expiry. He communicated this to Brett who said “let’s do it”. Andrew said that he would get straight on to his lawyers to draft the necessary documentation. Brett replied “Mate, this is not how I do business. If we’re all agreed on the main game let’s do the deal. The detail is not important. That’s all lawyer stuff that we don’t need to bother about”. When Andrew, a much more conservative businessman than Brett, expressed his preference for the deal to be properly negotiated and documented Brett wrote the address of the premises, the rent, the term, and the renewal term on the back of a menu under the heading “Heads of Agreement” and challenged Andrew to “take it or leave it – we’re sensible business people and can work out the rest of it as we go along”. At the suggestion of one of the party he reluctantly agreed to add the words “Subject to Contract” reluctantly acknowledging that various regulatory authorities may require something more formal than a signed menu. Andrew expressed his concern at the lack of documentation but, driven by his desire to get the premises, signed. Brett has now reneged on the deal telling Andrew that he has received a better offer from Andrew’s competitor. He has told Andrew that “just as you said it seems as if we didn’t have a contract after all as we didn’t cross the “t”s and dot the “i”s. No hard feelings I hope”. Andrew seeks your advice.