1. Owen sold his photocopying and laminating business for $45,000 to Miriam. As Miriam did not have the money to pay cash, Owen agreed to an immediate payment of $15,000 with the balance payable out of future profits over the next three years.

In the first six months the business did well and Miriam was able to pay Owen a further $5,000. A competitor then opened nearby. This competitor was part of a well known chain of photocopying shops and as such had access to cheap supplies of laminating and copying materials. Consequently, the competitor was able to undercut Miriam's business. Miriam's profits fell alarmingly.

Miriam advised Owen that financially she could no longer continue with the agreement and would have to close the business. Further, she accused Owen of knowing that the competitor was about to open up and therefore she was commencing legal action to rescind the contract based on fraudulent misrepresentation.

Owen contacted Miriam and made the following comments: "I absolutely deny your accusation. By my reckoning you still owe me $25,000. However, if you continue with the agreement I'll reduce that amount to $15,000." Miriam accepted the deal. Six months later Miriam landed a huge contract laminating all the posters for a chain of tourist attractions along the north coast of New South Wales. Miriam's profits have soared. Owen is now demanding that the original contract price be complied with (ie. Miriam pays the remaining $25,000). Is Miriam liable to pay the original contract price? Explain your answer.