Word Limit: Minimum 2,700 words - Maximum 3,000 words [includes footnotes and

bibliography]

QUESTION [30 marks]

ShresthaTailoris abuddingfashiondesignerin Sydneywhoseaimis to designherown

clothesandsellthem througharetailoutletownedbyher.Shedecidedtolook forsuitable

premisesfromwhichto sellherclothingdesignergoods.However,sinceshe knewshe

would not be able to finance this entire business, she asked her aunt for help to start her own

business.

Shrestha'saunt,Mrs Moneypenny,ownedmanypropertiesin HarrisPark(Sydney).She

agreedto leaseoneofhershopsto Shresthaathalfthe rentalshewouldnormallycharge.

Shresthainspectedthepremisesandtoldherauntthat she would liketo makesome

alterations to the layout so as to give the clothing shop'a smartdekko'appearance.

Shresthatoldherauntthat she wantedto starton the renovationsimmediatelyandwould

speaktothe localCouncilin Parramattato getthe necessarypermits.Shresthaalsoagreed

that she would pay for these alterations which, after quotes had been given, were calculated at

$65,000.Shresthatoldheraunthowever,thatshe did not wantto starton therenovation

project unless her aunt was certain that the property was for rent at the amount agreed.

Mrs Moneypennysaidshewould let Shresthaknow inthe nextfewdaysif she changedher

mindaboutrentingthe building.Shrestha alsosaidthat the openingoftheshop on the date

agreed to in the proposed lease would help her to market her clothing designs from which she

expectedto receiveahealthyfinancialreturn.Itwasestimatedthat the renovationsto the

shop would takesixmonths,bywhichtimeShresthawould havedesignedandcreated

clothes in time for the new fashion season.

A weekafterShresthaspokewith heraunt,shestartedon the renovationproject,having

heard nothing from her aunt. After several weeks after the renovation work began,Shrestha

noticedherauntpeepingintothe window ofthebuildingin whichtherenovationswerein

progress.

Beforethe leaseto rentthe buildingwassignedandjustasthe renovationworkwasalmost

complete,Mrs MoneypennyadvisedShresthathatshe, asthe potential landlord,no longer

wishedtocontinuewith the arrangementbecauseshe received ahigher rentaloffer fromMr

Rich.Shresthawasverydisappointedandwishedthat she hadasignedlease.Herbest

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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 Tailoras to her legal rights with reference to relevant principles of contract

law. Give reasons for your answer based on contract law and relevant precedents.