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Tutorial 4, Week 5

Question 1 Comment [CC1]: Remember your job is


to convince the reader, whether a client,
judge or examiner (like me) that your
Issue advice is correct. So after writing your
answer ask yourself: Would my answer
Can David claim rent arrears from Ryan under common law (consideration) and/or equity convince a client, judge or examiner?

(promissory estoppel) either from the 1st January 2011 or from the 1st January 2013? Comment [CC2]: The student could
have divided the issue into 2 common
law (consideration) and equity (see
Law summary answer) but this is OK

Common law:
Chappel & Co Ltd v Nestl Co Ltd: the court does not look at the adequacy of value.
Stilk v Myrick: repeating an existing obligation is not sufficient consideration.
Promissory estoppel:

Central London Property Trust v High Trees House Ltd: a party can be estopped from going
back on a promise if it is unfair to the other party.

Waltons Store (Interstate) Ltd v Maher: six elements must be proven in order for the promisee
to estopp the promisor on going back on its promise. Comment [CC3]: The student has
identified all the relevant law. Whilst
providing a short description of the legal
Application principle next to the case is not required, it
is a good idea because it jogs your memory
A) Davids claim towards Ryan under common law the 1st January 2011 as to the legal principles you need to use in
your Application section of the answer.

The contract between the parties is a simple contract and therefore requires consideration to
be binding. A written contract was concluded 1st January 2009 and an oral agreement
approached Ryan from David to reduce rent from $15 000 to $5000 due to construction
works. Applying Chappel & Co Ltd v Nestl Co Ltd consideration must have a value that is Comment [CC4]: Excellent the
student has explained what the oral
recognised by law. Whether the value is enough or not is a question for the court to decide, agreement is later the student explains
they only consider if value has been given. The value between David and Ryan was that Ryan that the promise by Ryan was to perform
an existing obligation and hence there is no
rented the premises from David and in return Ryan paid for having his restaurant in the sufficient consideration to support the oral
agreement from Ryan.
premises.
Comment [CC5]: The student has
repeated the law in the application. Whilst
The question between the parties was whether the oral agreement made to Ryan from David, no marks would be deducted, in a final
regarding reducing rent from $15 000 to $5000 a month, was a valid contract. Because of exam situation you may not have the time
to repeat the law (see my full answer in the
construction work around the premises and associated traffic it was difficult for customers to tutorial Week 5 audio recording as an
example of an answer that does not repeat
access the restaurant, this caused sales revenue to drop 60%. the law).

Applying Stilk v Myrick the question to answer is whether the oral agreement leads to a new Comment [CC6]: Excellent! The
student has referred to the cases in the
obligation or an existing one. As the court held in Stilk v Myrick, Ryan is still performing his application you must do this in your
obligation; paying rent and David is still providing the same premises, therefore the oral application. It shows me where you have
applied the law in your application.
agreement will not be sufficient consideration. The parties are performing their obligations
under the original written contract from 1st January 2009, even if the circumstances are a bit
different from what they were initially. An oral agreement will not prevail in court against a Comment [CC7]: The student has
explained why it is an existing contractual
obligation excellent!
written contract; therefore David will be able to claim Ryan for rent in arrears from the 1st
January 2011.

Davids claim towards Ryan under equity (promissory estoppel) the 1st January 2011

An oral agreement against a written contract will not be enforced in court under common law.
Applying Central London Property Trust v High Trees House Ltd the oral agreement may be
enforceable under equity which is an exception to the rule that consideration must be
sufficient. Applying Waltons Stores (Interstate) Ltd v Maher there is a test based on six
elements that must be proven in order to estopp a party from going back on its promise. The
six elements are: legal relationship, responsibility, reliance, intention, detriment,
unconscionability. David will not be successful in trying to force Ryan to pay the arrears Comment [CC8]: Once again this is
repeating the law, not applying the law
under promissory estoppel since the parties already have a legal relationship due to the written using the legal principles with the facts
contract and the oral agreement has arose from the written contract. David is responsible for relevant to the legal principles.

creating the assumption that reduced rent will occur by concluding the oral agreement with Comment [CC9]: Student has explained
what the legal relationship is
Ryan. Ryan relied on this assumption by paying the reduced rent, keeping his restaurant going
Comment [CC10]: Student has
and not filing for bankruptcy. David had the intention that Ryan would rely on reduced rent explained the element of responsibility
perhaps could have also mentioned that
because of the rail work and the fact that he would probably not find another tenant because David approached Ryan with the proposal.
of the market conditions. Ryan will suffer loss is David would go back on his promise Comment [CC11]: Student has
because then Ryan would be enforced by the written contract to pay the $15 000 instead of explained why Ryan relied on the verbal
agreement to reduce the rent.
$5000. It would also be unconscionable if David went back on his promise towards Ryan to
Comment [CC12]: Sttudent has
reduce the rent because it would be unfair due to the circumstances that the only party explained why there was intention by
summarising the relevant facts.
benefiting from the oral agreement would be David. I would not advice David to try to arrear
Comment [CC13]: Student has
the rent by invoke promissory estoppel as a legal ground. explained what the detriment is could
have calculated the $ figure for the
B) Davids claim towards Ryan under common law the 1st January 2013 detriment ($240,000)
Comment [CC14]: Excellent student
The circumstances are no different from what they were 1st January 2011. The written could have referred to the High Trees case
here as a similar case example.
contract from 2009 is still current and valid and therefore David will not have any problems to
arrear the rent under common law.

Davids claim towards Ryan under equity (promissory estoppel) the 1st January 2013

The circumstances the 1st January 2013 are a bit different from what they were the 1st January
2011. The rail work finished earlier than expected, the revenues had gone up 20% compared
to the time just before construction commenced and all of the six elements would no longer
apply for promissory estoppel to estopp David from claim Ryan. There is no longer a
detriment affecting Ryan and the court would probably not find it unfair to Ryan if David
went back on his promise because there would not be any loss attached to withdrawal of the
Comment [CC15]: Brilliant! The
promise. student has identified that detriment will
be the problem when applying promissory
estoppel to the rent in arrears from 1
Conclusion January 2013. HD!
Comment [CC16]: Student needed to
David can claim Ryan on the arrears under common law 1st January 2011. David cannot claim mention in the conclusion that promissory
the arrears under equity (promissory estoppel) 1st January 2011. David can still claim Ryan estoppel will not apply to the rent in
arrears from 1 January 2013 this is not
arrears of the rent under common law. David will not be estopped under promissory estoppel clear in the answer. Nevertheless overall
the student would have received a low HD
to go back on his promise. (85%).