Using the IRAC Formula

Tessa lives in a rented 5-bedroom house in Box Hill with her two teenage children. The landlord, Shalani, now believes she should be receiving a better monthly rental from the property, since the market has improved in that area, despite the pandemic. Shalani contacted her agent, Box Hill Realty (BHR), who sent an email to Tessa to explain that as her one-year tenancy agreement was about to expire, that the monthly rental was going to increase. Tessa has been living in the house for 3 years, her workplace is within walking distance and her 2children have just started at Box Hill Grammar. The last thing she needs right now is to have to move house. She responds to the agent's email, and offers to pay the same rent, but to generate extra income by renting two of the rooms out to students from Deakin University. Upon hearing of Tessa's offer from BHR, Shalani is reluctant, but is also aware that Tessa has been a good tenant and that her kids had just started at Box Hill Grammar. She tells the agents to ask Tessa to firstly find tenants willing to pay the room rental for a minimum of one year. Several emails are exchanged between Tessa, BHR and Shalani about the possibility of extending the lease for the same price but also renting out the two extra rooms. Tessa is able to find two students who are willing to pay $150/week per room so she and the agent sign a lease agreement that states the agreement is subject to: Formal approval of the Landlord to be given or withheld in its absolute discretion; and Execution of all legal documents by the Landlord and the Tenant. A few weeks later BHR contact Tessa to tell her that Shalani has found a family that is willing to pay 1.5 times the rent that Tessa offered (including the two student tenants' rent) and is therefore not willing to proceed with their agreement. Tessa is furious as she feels that a contract had already been formed and that BHR and Shalani must fulfil their obligations under the contract.

what would the issue be