Determine the critical legal analysis for the case below:

A. All Bright Consumables (ABC) Ltd manufactures PC components. It runs this aspect of its operation from a factory that it leases from JJ Industrial Rentals Ltd (JJ), and the machines used in the production process are rented from machines and Tools Ltd (machines Ltd).

Given the economic crises in 2010 and increasing competition from the Far East, ABC is in financial difficulties. In March 2010 ABC wrote to JJ of its financial problems and identified ‘We are suffering severe financial difficulties in these austere times. We both know you have factories that you are unable to rent, and unless you can reduce the rent on this factory we will have no choice but to cease trading and you’ll be left with another unrented factory.’ Following a discussion between the managing directors of both companies, JJ agrees to accept half the rent payment until such a time as ABC’s business picks up.

ABC also informed machines Ltd in the same manner about its financial problems and it agreed to take a quantity of the PC components manufactured in lieu of its hire charges for the financial year from 6 April 2010 to 5 April 2011.

In January 2011 JJ was suffering financial difficulties and demanded that ABC pay the full rent on the factory from February 2011. It also demanded payment of the rent owed from March 2010. It considers this part- payment of a debt and wishes to exercise its right to obtain payment. At this time, iMachines Ltd discovered that the PC components it had taken in lieu of hire charges were worth only half of the hire charges for the year. It has demanded that ABC pay the balance owed in cash.

Answer rating: 100% (QA)

FACTS ABC wrote to JJ in March 2010 of its financial difficulties and JJ agreed to accept half the rent payment until ABCs business picked up ABC also informed machines Ltd of its financial difficulti... View the full answer