BUSINESS LAW ASSESSMENT 2

LEGAL ANALYSIS/CASE STUDY 2

Your burger establishment has now been running for 6 months.

Part 1 - Leasing and Property

The Mexican Restaurant next door has closed down and the landlord of that premises has approached you to see if you are interested in expanding to this space. You are very keen. You have been supplied with a standard leasing contract.

1.1 What else does the landlord need to provide to you in relation to the rental property?

The standard lease provided to you by the landlord, James, contains the following clause:

Clause 5.1 Lessee's Consent

Where, pursuant to any Act or requirement of any relevant authority, the Lessee's consent is required to any process, step or dealing by the Lessor with its interest in the Land, the Lessee shall give its written consent to such proposed process, step or dealing within seven (7) days of receipt of a written request from the Lessor to do so, provided that such proposed process, step or dealing does not materially detrimentally affect the Lessee's use of or access to the Premises;

The landlord wants to install an inside wide arch between the two restaurants so he can continue to offer you (and subsequent lessees) double restaurant space. However, the modifications will mean that you cannot trade (other than by take-away) for at least two weeks. You are unhappy. You point out that you are quite happy with the amount of access you have to the second restaurant via the kitchen. You dont want to give James permission to do so.

1.2 What are your obligations and liabilities under Clause 5.1?

The landlord has included in the lease that you must install new extractor (ceiling) fans above the ovens to minimise smoke damage to the ceiling.

1.3 Are the extract (ceiling) fans fixtures and, if they are, can you take them with you if you vacate the premises?

Part 2 Contracts

In the signed lease agreement it says that all ovens and installed equipment in the kitchen must be in good working order. You have now taken over the new premises and found one oven is not working.

2.1 What can you claim from the landlord?

Part of the expansion has allowed for the business to specialise in gourmet hamburgers.

You have entered into an oral agreement with your brother to buy fish from his fish business for your new gourmet fish burger. On the first delivery you notice the fish is not of good quality and it is not well covered with ice, which raises concerns about whether it can be consumed. You dont want to pay for the fish.

2.2 What contractual issues can you raise in order to avoid paying the money that your brother has asked for?

You have some special t-shirts made with your establishments name and logo. At $20.00 each they are not selling very well, so you get Carol to put a sign in your window saying the t-shirts are on sale. You tell her to discount them to $15.00 but she puts $5.00 on the sign. Zena has come into buy 30 t-shirts because she really likes your burgers.

2.3 Are you obligated to sell the T-shirts to Zena at $5.00 each?

You have decided to sell two old fridges to allow a kitchen upgrade due to the expansion. The Thai restaurant down the road is run by Tina. You know that Tina is looking for second-hand fridges. You send her an email asking her if she is interested in your two fridges for a total of $5,000. Tina responds saying Will only pay $4,800. What say you? At 9.00am the next morning you send Tina an email saying Okay, good, I can agree on a price of $4,800. At about the same time Tina sent an email saying Cancel my earlier counter-offer. I will take the fridges for $5,000 as I need them as soon as possible and I cannot bother with haggling over the price.

According to the electronic records

Tinas email in box received your email accepting the price at $4,800 at 9.40am and she looked at it at 9.45am.

You received Tinas email stating that she was willing to pay $5,000 at 9.30am but you did not look at it until 10.00am.

2.4 Have the fridges been sold, and, if so, at what price?

George is a second chef you have employed due to the expansion. George has been working with you for six months and thinks he would run a hamburger business much better than you do. When George tells you he is leaving and is going to open a new Burger Restaurant on Kangaroo Island called Georges Burger Restaurant you remind him that he signed a letter stating that he would not work in any capacity for another burger establishment anywhere in South Australia for a period of 5 years.

2.5 Is George bound by the restraint clause in the letter? If so, why? If not, why not?

TOTAL WORD COUNT PERMITTED: 2,500 WORDS