QUESTION [30 marks]

Shrestha Tailor is a budding fashion designer in Sydney whose aim is to design her own clothes and sell them through a retail outlet owned by her. She decided to look for suitable premises from which to sell her clothing designer goods. However, since she knew she would not be able to finance this entire business, she asked her aunt for help to start her own business.

Shrestha's aunt, Mrs Moneypenny, owned many properties in Harris Park (Sydney). She agreed to lease one of her shops to Shrestha at half the rental she would normally charge. Shrestha inspected the premises and told her aunt that she would like to make some alterations to the layout so as to give the clothing shop' a smartdekko' appearance.

Shrestha told her aunt that she wanted to start on the renovations immediately and would speak to the local Council in Parramatta to get the necessary permits. Shrestha also agreed that she would pay for these alterations which, after quotes had been given, were calculated at $65,000. Shrestha told her aunt however, that she did not want to start on the renovation project unless her aunt was certain that the property was for rent at the amount agreed.

Mrs Moneypenny said she would let Shrestha know in the next few days if she changed her mind about renting the building. Shrestha also said that the opening of the shop on the date agreed to in the proposed lease would help her to market her clothing designs from which she expected to receive a healthy financial return. It was estimated that the renovations to the shop would take six months, by which time Shrestha would have designed and created clothes in time for the new fashion season.

A week after Shrestha spoke with her aunt, she started on the renovation project, having heard nothing from her aunt. After several weeks after the renovation work began, Shrestha noticed her aunt peeping into the window of the building in which the renovations were in progress.

Before the lease to rent the building was signed and just as the renovation work was almost complete, Mrs Moneypenny advised Shrestha that she, as the potential landlord, no longer wished to continue with the arrangement because she received a higher rental offer from Mr Rich. Shrestha was very disappointed and wished that she had a signed lease. Her best 2 friend, Pinky, who is studying law but who has missed many classes told her that there is nothing Shrestha can do. Besides, Pinky also told Shrestha that the law will not allow her to sue her close relative. Pinky advised Shrestha to go to the temple and pray for good luck to try and get $65,000 back.

Advise Shrestha Tailor as to her legal rights with reference to relevant principles of contract law. Give reasons for your answer based on contract law and relevant precedents.