Question: equity australian law rick conducts a retail business of...
Equity - Australian Law
Rick conducts a retail business of the sale of upmarket clothing. Charlie owns, or owned, a Unit in the Perth northern suburbs – call it ‘the Unit’.
Rick made a contract to buy the Unit from Charlie for the purposes of conducting his clothing business – call it ‘the Contract’. Both Rick and his wife are somewhat superstitious. When conducting the inspection of the Unit prior to making the Contract, they concur that ‘this is just what we want for our shop’. Once they see the Unit, they lose their interest completely in any other premises.
Rick agrees that the Unit is run down and decrepit, and units like it are ‘a dime a dozen’, with nothing obvious to differentiate the Unit from any number of similar units on the same street – though it is nevertheless just what they want.
The then current market value of the Unit, $300,000.00, is easy to ascertain, as the Unit is virtually identical to other units on the street, enabling comparative sales information to be accurate.
Rick negotiates the following agreement with Charlie, reflected in the Contract: The purchase price of the Unit would be $500,000, some $200,000 in excess of the then current market value. As part of the consideration, Charlie would loan $100,000.00 interest free to Rick. This would mean that the total amount ultimately to be paid to Charlie was $600,000 ($500,000 for the Unit, $100,000 to repay the loan). Rick would be entitled to vacant possession within 7 days of the Contract and payment of the whole of all sums outstanding to Charlie would be one year from the date of the Contract.
The purpose of the loan of $100,000, reflected in the Contract, was for Rick to refurbish the Unit for use as his shop. He was confident that after refurbishing it, as a up market clothier, his business would ‘go through the roof’ and that after a short while of doing business, he would make enough to pay Charlie.
Immediately after making the Contract, Charlie regrets his decision. He lives close to the Unit, and recounts that he promised his aged parents, who expressed a desire to live close to him that they could live out their days in the Unit rather than in a nursing home.
Charlie resolves to breach the Contract and to resist its performance to enable his parents to live in the Unit.
Rick seeks specific performance of the Contract.
Now answer the following question, and discuss the legal reasoning and authorities to support your answer:
Discuss Rick’s entitlement to specific performance of the Contract. Include in your discussion the fact that part of the consideration was the payment of money from Charlie.