Thu Minh Nguyen | 32025394

Question 1
Matthew leased a 2-story building from Ace Properties Pty Ltd. Matthew ran a second-hand
goods shop on the ground floor and he lived in the rooms upstairs. When it came time to
renew the lease for a further 3-year period, Ace Properties Pty Ltd wanted to include a new
clause in the tenancy agreement that the building could only be used for business premises.
Matthew made it clear that he wished to continue to live above the shop and that he would
not sign the new lease.

A representative from Ace Properties Pty Ltd stated that if Matthew signed the new lease,
with the new term, there would be no objection to him continuing to live in the building. As a
result of this statement, Matthew signed the lease for a three-year renewal period. If Matthew
was not able to continue to be able to live above the shop, he would not have signed the new
lease and would have gone to live at some new premises that were available at the time where
he could also have lived above the shop.

Six months after Matthew renewed the lease, Ace Properties Pty Ltd had received an offer
from a developer who wished to buy the building, but only on the condition that it was empty
(that is, free of any tenants). Ace Properties Pty Ltd is now seeking the forfeiture of the lease
with Matthew on the basis that Matthew is in breach of its terms by residing in the building.

Who has stronger legal arguments in this case, Matthew or Ace Properties Pty Ltd?
Explain. (600 words) 10
marks
Ace Properties Pty Ltd proposed a new contract with agreement on both parties after
Matthew declined to sign the original offer and therefore accepted the new terms to renew his
3-year lease. Because this contract was signed before the offer from the developer, Matthew
has a stronger legal argument as Ace Properties Pty Ltd made a binding agreement and to
uphold his lease for 3 years. Mathew has signed a contract for the lease period on a condition
to a new term, however they may not be an official disclosure agreement that elaborates on
the condition that Mathew can live while operating his business in the property. For Ace
Properties Pty Ltd, it is seen as an unconscionable conduct as their actions are deemed as
going against good conscience, violating section 20 – prohibition against unconscionable
conduct. This section implies that a person may not participate in conduct that is
 Thu Minh Nguyen | 32025394

unconscionable in the sense of the occasionally existing unwritten law in trade or commerce
(Australian Contract Law, 2019). Ace Properties Pty Ltd have backtracked from their word,
therefore straining the relationship between themselves and a loyal tenant and further causing
further distress on their living situation.

As per Australian competition and consumer commission to avoid being a victim of

unconscionable conduct, Mathew should have ensured there were commercial agreements in
writing. This correlates with section 21 — unconscionable conduct in connection with goods
or services, which postulates that parties are not permitted to engage in conduct that is in any
way unconscionable in trade or commerce whether providing or purchasing products or
services (Bligh, 2021).

However, according to the given case of Ace Properties Pty Ltd V Matthew, there were no
recorded contract or commercial agreement that stated the conditions are accepted of Mathew
being accommodated in the property whilst pursuing business operations. When matters are
taken to court, Mathew will have a stronger case as the court will determine any
unconscionable conduct occurred during the time of a dispute or disagreement among both
parties, the court will offer Mathew remedies such as compensation for loss or damage.
Section 22 states that matters the court may have regard to for the purposes of section 21.
Mathew will also have the court declare the contract as void. Ace Properties Pty Ltd will
receive a financial penalty for their misconduct, unreasonable and misleading act.

Furthermore, this case abides by the Landlord and Tenant Act 1954, where if a landlord sells
the building in which a tenant lives and has leased a business, no further action can affect the
tenant (Owenhodge, 2022). The new owner of the property will be required to honour
Matthew’s lease until the end of its term, or Ace Properties Pty Ltd will be obliged to decline
their offer.
 Thu Minh Nguyen | 32025394

Question 2
Raphael, a renowned dance instructor and owner of the Latino Dance Academy, has
benefited immensely from his recent brief appearance on a celebrity ballroom dancing show.
Enrolment figures at his academy have swelled so much that he decides to expand into a new
facility in the heart of Sydney’s CBD.

All that remains is for the flooring to be installed. Raphael is very particular as to the type of
hardwood he wants for the academy’s ballroom surface, as traction and colour are quite
important to him. Raphael contacts Wilson’s Flooring in Sydney’s outer west to see what
types of wood are available and to obtain a quote. A salesperson, Brianna, recommends a
polished oak floor with a spring underlay for shock absorption as this is described as ‘perfect’
for dancing. The total price for parts and labour is quoted at $64,000. Raphael accepts that the
quote is reasonable, and he enters into a signed written contract with Wilson’s Flooring for
the supply of this polished oak floor with a spring underlay. Brianna notifies Raphael that the
floor will be trucked to the new dance academy and installed on Monday 8 August 2022.

On the morning of Monday 8 August 2022, Brianna notices that Wilson’s Flooring has an
inadequate supply of the particular type of oak wood that Raphael has ordered. She instead
instructs the stockroom staff to load up a pine wood variety, which has similar properties but
is slightly inferior in quality and a bit slipperier than the oak wood. The wood is transported
to the new Latino Dance Academy and installed and then set and polished. Once installation
is fully complete, Raphael arrives to inspect the ballroom. He immediately notices that the
colour and feel of the wood that it is of a different variety than he ordered and paid for.
Raphael contacts Brianna at Wilson’s Flooring and is furious to learn that a
different wood to that agreed upon was used.

Provide advice as to whether Wilson’s Flooring has breached the contract with Raphael
and if so, whether Raphael is entitled to terminate the contract. (600 words) 10
marks
When one party in a legally binding agreement fails to fulfil their obligations in accordance
with the provisions of the agreement, a breach of contract has occurred (Kenton, 2022).
 Thu Minh Nguyen | 32025394

Wilson’s Flooring representative, Brianna, has unquestionably violated Raphael’s contract as

she claimed to use a particular polished oak floor and deceived the client by using a different
kind when she was short of materials, without his knowledge. The contract explicitly
constitutes that polished oak floor is to be used by Wilson’s Flooring and there was no other
exemption to the fact. Brianna never once mentioned a substitute type of flooring in the
original contract and mislead Raphael by withholding information in hopes that he would not
notice. Section 18 applies to this scenario as a party is forbidden from engaging in behaviour
about products or services that is likely to mislead or deceive in trade or commerce inside
Australia (Corones et al., 2016). The main purpose of Section 18 is to protect clients from all
false statements made in any context of trade or commerce, including pre-contractual
discussions and ads.

Wilson’s Flooring can provide remedies to rectify the situation, for instance, compensation
for the damages for breach of contract or enforcement, entailing recovery of the contract
price. According to Sections 73 and 74 of the Contract Act, the party that is injured by a
violation of a contract is entitled to reimbursement for any damage that naturally results from
the breach in the ordinary course of business (Chamber of Law, 2018). Since Raphael has lost
time and money by receiving the wrong type of floor that was not stated in the contract, he
rightfully deserves reimbursement. He was in agreement of one type of flooring that he
initially paid for, so the transaction of his money has not been a fair trade since he was
supplied with the wrong flooring. The second flooring that was not his original choice is also
more slippery, which may be hazardous and dangerous to dancers, which is highly
detrimental to Raphael’s reputation as he is a renowned dance instructor. The flooring that
Brianna has implemented may cause Raphael his whole business that he has worked hard to
achieve.

Raphael may choose to arrange a new contract to reimburse him from the incorrect flooring,
whereby Wilson’s Flooring can remove the old flooring and add his preferred polished oak
flooring. This may benefit both parties as they will both attain the original purpose of the
contract without further conflict. The terms for the formation of a new contract must still be
met, although a contract may be ended and replaced by a subsequent agreement, and it
occasionally may be terminated by unilateral consent. Conditions, intermediate terms, and
warranties are the three categories into which terms in a contract can be divided. Conditions,
which are the cornerstones of the contract and are relevant in this situation, are defined as the
 Thu Minh Nguyen | 32025394

breach that results in the right of termination. In this instance, Raphael’s condition is that all
of his floors are polished oak wood and Wilson’s Flooring must abide by that until the very
end, no matter which route it takes to conclude to this.

Question 3
Andrew is 79 years old and is in the mid-stages of dementia. His wife, on whom he had relied
for many years, died three years ago and Andrew has no near relatives living in Sydney. He
owns his home outright—that is, there is no mortgage on it— and it is currently valued at
$850 000. Andrew receives an age pension and has a number of small investments that, all
up, bring in about $1,000 a week. He is completely reliant on his neighbour, Victoria, for all
his needs. Recently, Victoria convinced Andrew to approach Easy Finance Company and
enter into an agreement with them to borrow $60,000. Victoria told Andrew that the money
was needed for an operation on Victoria’s adult son, but it was actually for a business venture
that Victoria wanted to enter into. Victoria told Andrew that she would handle all the loan
documentation and the loan repayments once the money was approved, and that he was not to
worry.

Victoria helped fill out the application to the finance company and it was lodged 2 weeks
ago. Easy Finance quickly investigated Andrew’ financial background and approved the loan
on the basis of using Andrew’s ownership of his house as security for the loan. A first
mortgage for the loan was taken out over Andrew’s property.

When Andrew attended the loan company’s office with Victoria, an employee of the finance
company told him that, as the loan was for less than $100,000, it was not necessary to have
Andrew consult a solicitor. As such there was no need for Andrew to take the papers away to
read them or to obtain any independent advice on them.

Further, Victoria told Andrew that she had read through all the loan documents and that there
was nothing for Andrew worry about. Andrew was at no time told what would happen if
Victoria failed to make repayments on the loan, nor did he think to ask.
 Thu Minh Nguyen | 32025394

The repayments on the loan—that is, principal plus interest—are $2000 per calendar month
and three months into the loan, Victoria defaulted and Easy Finance is now threatening to sell
Andrew’s house.

Advise Andrew and consider both the common law position and the statutory position as to
what his legal rights are. (600 words) 10 marks
Common law is a corpus of unwritten rules that are founded on judicially established
precedents (Chen, 2022). Written laws that have been approved by society are referred to as
statutory laws and are those that have been passed by a nation's legislature and government
(Diffen, 2022). Research study, the location of prior relevant instances, the extraction of
statements and sentences passed, and finally the determination of the applicable common law
are all steps in the process of determining the common law for a given case (Odetola, 2015).
Higher court rulings override those of lower courts and older cases, however, statutory laws
are already written; all that is required is to apply them to a particular case.

Given the nature of Victoria’s misleading conduct, if Andrew presents himself to the court,
he will have a fighting chance to reclaim his house. Andrew can claim a rescission of the
contract as he has experienced ingenuine consent throughout the process with Victoria,
whereby the agreement was an unilateral mistake, he was under undue influence, and she
inflicted unconscionable conduct. When a contract is rescinded, the status quo previous to the
agreement is reinstated, and the agreement is viewed as never having occurred (Hobart Legal,
2022). Contracts may also be voidable based on evidence of fraud, mutual mistakes,
incapacity, coercion, and undue influence, as well as failure by one party to perform its
obligations (Liberto, 2021).

Not only is Andrew an older and more vulnerable person, but he was also suffering from
mid-stages of dementia, which opened doors for Victoria to take advantage of his situation to
benefit her own. Victoria had also misled Andrew in the beginning, stating that the contract
was needed for an operation on Victoria’s son and concealed the true intentions of the
contract so that Andrew would be inclined to agree. When Andrew attended the loan
meetings, he was told that a solicitor was not needed in this case and he trusted that
 Thu Minh Nguyen | 32025394

judgement, therefore he did not adopt any legal advice. He was not capable to comprehend
his legal rights and understand the nature of the contract.

If Andrew presents these reasons to the court, he can claim his entitlement to a rescission and
void the contract. Victoria clearly acted in self-interest, only to benefit herself and to
purposefully use Andrew’s vulnerability to her advantage. She tenaciously withheld
information that was vital for Andrew’s understanding and insight, which left him with an
unconscionable amount of debt that he was not his to owe. A judge may decide that a contract
was unjust or that certain facts were misrepresented, but not decide to void it (Liberto, 2021).
Instead, the judge may impose financial penalties that must be paid by the wrongdoer to the
victim.
 Thu Minh Nguyen | 32025394

REFERENCES

Australian Contract Law. (2019). Section 20).

https://www.australiancontractlaw.info/legislation/acl/s20#:~:text=(1)%20A%20person
%20must%20not,is%20prohibited%20by%20section%2021.

Bligh, K. (2021). Statutory unconscionable conduct. https://cgw.com.au/publication/does-

statutory-unconscionable-conduct-require-some-vulnerability-ordisadvantage/
#:~:text=Section%2021%20of%20the%20Australian,called%20'statutory%20unconscionable
%20conduct'.

Chamber of Law. (2019). Principles of grant of damages under section 73 and 74.
https://www.tclindia.in/principles-of-grant-of-damages-under-section-73-and-74-of-the-
indian-contract-act-1872/

Corones, S. G., Christensen, S. A., & Howell, N. (2016). Submission to Australian Consumer
Law Review Issues Paper.

Hobart Legal. (2022). Consumers money and debts.

https://www.hobartlegal.org.au/handbook/consumers-money-and-debts/contracts-2/fulfilling-
or-ending-a-contract/#:~:text=Rescission%20is%20cancelling%20the%20contract,treated
%20as%20never%20having%20existed.

Kenton, W. (2022). Breach of contract. https://www.investopedia.com/terms/b/breach-of-

contract.asp

Liberto, D. (2021). Rescission. https://www.investopedia.com/terms/r/rescission.asp

 Thu Minh Nguyen | 32025394

Odetola, O. (2015). Penalties and liquidated damages in a changing world: Rethinking the
common law position. Journal of Sustainable Development Law and Policy (The), 6(1), 247-
271.