Contract Law- Terms of a Contract

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  • Topic: Contract, Law, Estoppel
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LAW 203 – LAW OF CONRACT 1

ASSIGNMENT 2

STUDENT ID: S120343
LECTURER/TUTOR: MR HUMPHREY MARAU
NUMBER OF WORDS: 2284
Contract law is a body of law that governs oral and written agreements associated with exchange of goods and services, money, and properties. Not only does contract law set out the rules and guidelines of how to form a contract but also teaches us how the parties to a contract are to fulfil it and what may happen when the terms of a contract are not fulfilled.

The background or facts of the scenario are that Credit Corp (plaintiff) leased its commercial property situated in Vitogo Parade to Mr Singh (defendant) in 2002. The lease stipulated that interest would accrue on arrears of rent and outgoings and was due to expire on 1 April 2012. Sugar City Mall was the major shopping centre in town and Singh operated a bookstore from the premises called the Book Centre. By the beginning of 2007, MH’s had opened “Mega Centre” a large shopping hub which quickly became the most popular shopping destination in town. This new development had quickly become the most popular shopping destination and as a result, Singh suffered a substantially reduced turnover (defined as the amount of business transacted during a given period of time) and had difficulty paying the rental. Singh discussed a rent reduction with Credit Corp but the parties could not come to an agreement and as a result, Singh’s turnover continued to decline. Credit Corp was aware that the turnover was continuing to decline but wished to continue a contractual relationship with Singh. Singh was in no doubt about what he was obliged to pay under the lease, but his turnover made it clear that he could not do so and continue to trade. For this reason Singh wrote a proposal asking that the rent be reduced. In early 2012, Singh failed to make one payment of the monthly rental and thereafter paid only half of the monthly rental after which Credit Corp sought a proposal from Singh in respect of current rent and arrears dated 15 November, promising payment of half of the rental due plus $1000 towards the arrears and no interest payable on the arrears. The proposal stated that this new agreement was to continue until the lease expired unless circumstances improved. This offer was accepted by Credit Corp via a telephone call to Singh and said that that it would accept the proposal to pay half rent and the monthly rental towards the arrears. The parties, however, did not discuss the interest during the telephone conversation. Credit Corp did not provide a written response to Singh’s proposal and Singh continued to occupy the premises and make payments of half the rental plus $1,000 towards the arrears, without interest. At the expiry of the lease on 1 April 2012, Singh evacuated the premises and handed in a full and final cheque on the basis that the cheque extinguished the arrears due, but without the interest content as outlined in the proposal.

The issue at hand which must be dealt with comprehensively (the question of this assignment) is the query brought by Credit Corp concerning whether or not it can recover unpaid rent an interest on the arrears.

The scenario for this assignment deals with an area of contract law which requires the principle of estoppel to be applied. Estoppel can be defined as a rule that applies, in certain circumstances, to keep a party to a promise made in relation to an existing contract. In other words it is a rule of law that prevents a person from denying the truth of a statement he has made or from denying facts that he has alleged to exist. For instance, the doctrine of estoppel may, in some cases, apply to save an agreement that would otherwise fail for lack of consideration. That is, is a person makes a statement of fact and another person acts on it, the maker will be prevented from denying the truth of the statement in subsequent litigation.

In relation to the scenario in question, this principle can be...
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