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.
ABC Electrical Engineering Company Limited (ABC) has contracted to provide their services to XYZ Storage Company Limited (XYZ), to provide them with the electrical; engineering specifications for the building of a warehouse. One of the clauses in the twenty page signed contract states that:
Clause 20. Whilst ABC undertakes to perform all services with due care and diligence, the liability of ABC Electrical Engineering Co Ltd to the client arising out of the performance or non-performance of the said services shall be limited to a maximum of $150,000.
The work goes ahead and the warehouse is completed. Six months later, a fire breaks out in the warehouse and investigators trace it back to an electrical fault. The electrical who was sub-contracted from another firm to do the work claims she followed all specifications exactly as stated and it is clear that no fault is attributed to her or to her firm.
The specifications are examined and it is found that the new type of material used in some of the fittings had not been correctly calculated for in the specifications by ABC, although it had been noted that it was to be used.
Damages amount to $600,000. ABC Claims that if it is liable at all, this should be limited to $150,000. XYZ claims the full amount of the damages from ABC.
Please discuss the arguments that each party can raise in regard to ABC’s liability and conclude by indicating who has the stronger argument.
Zig and Yul have been negotiating the sale and purchase of Zig’s accounting business. As well as the business, Zig is selling the office property in which the business is conducted. Having inspected the accounts and noting that Zig had six long-term and large clients who brought in a substantial sum of profit, Yul was happy to agree with the asking price of $750k.
In the final discussion just before signing the contract, Yul said to Zig “I’ve just heard that there is a bad infestation of white ants in this part of town. How’s the timber here?” to which Zig replied “Seems OK but you can have it checked if you like. By the way did you hear the news about the local factory which makes car mirrors?” Yul replied “Oh yeh, I heard something about them moving.” Following this conversation they both signed off on the contract.
Yul did not make any inspection for white ants and sadly three months later he discovered the property needed some expensive work done to the roof because the timber had been damaged by white ants. His problems did not stop there because the local factory which Zig had mentioned had not moved to other premises; they had closed their business shortly after Yul bought Zig’s business. Yul discovers they had informed Zig that this was going to happen several months previously.
When inspecting the accounts, Yul had noticed that they were one of Zig’s larger clients but had not thought any more about them. All this meant that the profits Yul had expected had diminished considerably and now he thinks that Zig had cheated him. He thinks Zig should take back the business and refund his money which of course, Zig refuses to do.
Please discuss the arguments that each party will raise in regard to this issue and conclude who has the stronger argument.