Advise Axel as to his legal rights with reference to relevant principles of contract law

QUESTION 1 [30 marks]

Axel Wong is an ambitious fashion designer whose aim is to design his own clothes and sell

them through a retail store owned by him. Axel decided to look for suitable premises from

which to sell his range of clothing designer goods. However, since he knew he would not be

able to finance his entire business, he asked his father for help.

Axel’s father, who owned many commercial properties, agreed to lease one of his shops to

Axel at half the rental he would normally charge. Axel inspected the premises. It looked like

an old factory. Axel told his father that he would like to make some alterations to the layout

of the shop so as ‘give the clothing shop a modern and trendy look.’

Axel told his father that he wanted to start on the renovations immediately and would speak to

the local Council in Burwood, Sydney to get the necessary permits. Axel also agreed that he

will pay for these store renovations which, after quotes had been given, were calculated at

$50,000. Axel, however, said to his father that he did not want to start on the renovation project

unless his father was certain that the shop was available for rent at the amount agreed.

Axel’s father said he would let Axel know in the next few days if he changed his mind about

renting the shop to him. Axel also said to his father that the opening of the shop on the date

agreed in the lease was important to him to ensure success in the business. It was estimated

that the renovations to the shop would take 3 months, by which time Axel would have designed

and created the required shop stock for sales.

A week after Axel reached an agreement to sign the lease with his father, Axel started on the

shop renovation project, having heard nothing from his father. A month after the renovation

work began, Axel noticed his father drive past very slow past the shop in which the renovations

were in progress.

Axel received a phone call from this father, two months later, who said he received a higher

rental for the same shop and therefore will not be signing the lease agreement with Axel. Axel

threatened to sue his father for breach of contract. His father replied “we are family. I love

you. You can’t sue me. Besides, I have not signed the lease agreement and so the law is on my

side. Bad luck, son.”

By this time, Axel had already spent $50, 000 on renovating the shop to suit his business needs.

Advise Axel as to his legal rights with reference to relevant principles of contract law. Give

reasons for your answer based on contract law (common law legal principles and relevant

precedents.