MLM720 Introduction to Commercial Law – Case Study One

Question

Martin owns a scallop boat. In 1997, Martin leased the boat to his friend, Tony for 10

years. The annual rental was $20,000. It became apparent in year 2000 that scallop

numbers were declining and Tony soon realised that he would be unable to meet the

annual rental charge unless the catch improved.

He approached Martin and advise him of his fishing and financial difficulties. He also

complained that the engine in the scallop boat was not as powerful as he had been led

to believe. Martin denied that had ever made any promises or statements about the

engine power. However, he said that he was prepared to halve the annual rental until

the catch improved, and, accordingly, the rental charge was reduced to $10,000.

Martin signed a document to this effect.

In 2003 the catch improved to such an extent that Tony is able to resume paying

$20,000 a year. Martin was delighted to advised Tony that not only did he have to pay

$20,000 a year until 2006, but also the $30,000 forgone by Martin in the previous

three years.

Advise Tony whether he must pay the $30,000 claimed by Martin.