Question 3:8 marks

Stuart had a 5-year written lease of a shop in the Prince Mall. He entered the lease at $1000 per week at the end of 2014 and ran a successful music business for about two-and-a-half years. In 2017 the business was affected by decreased sales in CDs as a result of the increased ability of people to access music through the internet.

In December 2017 Stuart asked the lessor, Westphalia Marts Pty Ltd, for a reduced rental of $700 per week until the business improved. He told the lessor about his business problems and plans to diversify and indicated that he might have to terminate the lease early. Westphalia Marts agreed to allow Stuart to pay the reduced rent and in January 2018 Stuart began to pay the new agreed rent of $700.

In December 2018 Westphalia Marts decided to sell the Mall, including all the shops. They wanted the income from the Mall to look healthy, and asked Stuart to pay the full amount of $1000 per week rental beginning in January 2019 and also demanded the shortfall of $300 per week for each week of the year 2018.

Advise Stuart, with reference to the relevant legal principles.