Outline the law of contract relating to the situation indicating the likely result of Alphonse’s claim



Question 1

“Bert owned an early historic speed boat which he decided to sell for $50,000. Bert told his friend James and James said he was very interested and would Bert give James the first right to buy the speed boat. Bert agreed to do so. After a few weeks Bert asked James if he still wanted to buy the speed boat. James said he was seriously thinking about it. Bert told James he was going to advertise the speed boat “for sale at $60,000 or near offer” on the Historic Speed Boat Club’s notice board.

In response to the advertisement in the club Bert received a telephone call from Alphonse.

Bert told Alphonse the speed boat was for sale “But someone has right of first refusal.” Alphonse then expressed surprise and asked Bert if he was selling or not. Bert said he was selling the speed boat for $60,000 or near offer and invited Alphonse to call and inspect the boat. Alphonse called on Bert and after inspecting the boat offered Bert $50,000 for it. Bert said he would have to speak to James before accepting. Alphonse then said he would pay Bert the asking price of $60,000. Bert told Alphonse to wait a minute and Bert went into his office and rang James telling him what Alphonse had said. James said he would buy the boat for $50,000 as originally agreed.

Bert said to James “I suppose I have to sell the boat for $50,000 to you”.

Bert then told Alphonse about the conversation with James.

Alphonse claimed the speed boat was already sold before the discussion with James.

* Outline the law of contract relating to the situation indicating the likely result of Alphonse’s claim.

Question 2

Sol, a developer, owned the Westside Shopping Centre which contained ten specialty shops. Jean, a 17 year old fashion clothing designer, leased one of the shops in the centre in July 2012 for a period of five years at a monthly rental of $6,000. In September 2012 Jean informed Sol that due to poor current trading conditions, the leased shop would have to close. Sol suggested to Jean that he would prefer Jean’s shop to remain open in the shopping centre and to assist Jean he would accept a rent reduction of 60% for the next six months. Jean turned 18 in March 2013.

Jean accepted Sol’s offer and remained in the shop until April 2013 when Sol gave Jean a letter requesting full rental payment and the arrears of rent for the period of October to March inclusive. Jean closed the shop immediately on receipt of Sol’s letter and Sol relet the shop the following week to Daisy for $7,000 a month for the next four years. Jean had paid the reduced rent for the October to March period. Sol threatens to sue Jean for the balance of the rent for the October to March period and also for breach of the five year lease contract”.

* Discuss the law of contract relating to this situation and state the likely outcome