Timmy Thompson, who finished his second year at a local community college last May, sees an advertisement

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Question:

Timmy Thompson, who finished his second year at a local community college last May, sees an advertisement to rent an apartment at Ocean Apartments for $1,500 a month. Timmy walks into the lobby of Ocean Apartments to rent an apartment, but he is told by Lily Lightfoot, the President of Ocean Apartments, Inc., that there was a mistake on the ad and rent is actually $2,000 a month. Timmy says he doesn’t like getting swindled and shouldn’t get the apartment as he signs the 1 year lease. Lily then signs the lease on behalf of Oceans Apartments, Inc., the entity that owns the apartments.

1. Based on the facts above, have the parties entered into a binding contract? Please explain your answer, making sure that you discuss each element of a contract and identifying how each was or was not met.

The Lease began on June 1, 2012, and Timmy moved in that day. By this time he has paid the $2,000 rent for June and $1,000 as a security deposit. In mid-September, Lily notified Timmy that he has not paid any rent for August and September, which is due on the 5th of the month. Timmy and Lily make an oral agreement that if Timmy pays all the rent he owes by October 5th (i.e. August, September, and October rent), and pays the rent on the 1st of each month instead of the 5th, his rent from November to May will be reduced to $1,800 a month. In addition, they agree that if Timmy doesn’t pay rent as just described, he shall pay $2,200 per month, and $8,000 as a one-time late fee penalty. On October 5th, Timmy pays the $6,000 in rent owed; however, Timmy pays no rent in November or any other month and Oceans Apartments, Inc. properly evicts him from the property on February 28th.

2. Ocean Apartments sues Timmy for breach of contract to get a money judgment. Who should win, how much (if any), and why? Explain your answer in detail, including exactly how and why you came up with the amount Ocean Apartments, Inc. should receive, if anything.

After answering #2, let’s add two new facts. As Timmy dropped off the $6,000 in October, he overheard Lily having a conversation with a state official that Ocean Apartments, Inc. did not have a license to rent as it lapsed about 3 years ago. Also, the reason Timmy couldn’t pay was because he was fired from his job on October 10th and he had no money.

3. Analyze each fact separately and indicate whether or not either, neither, or both allow Timmy to avoid liability to Ocean Apartments. Why, or why not? Explain in detail.