Lee dreams of opening an Asian inspired fusion caf in Croydon. He is looking to take...
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Lee dreams of opening an Asian inspired fusion café in Croydon. He is looking to take over an existing café that does not need any refurbishments from his side. He is lucky to find a recently closed café that had a similar business concept. He contacts Virat and Rohit, the joint owners of the property, to engage in lease negotiations. Lee discusses all necessary details with the owners. The lease is slightly above Lee's budget. However, Virat highlights the great location of the café. It is very close to Croydon station. During the meeting. Virat states: "Don't worry about the lease being slightly over your budget. It is a great spot. The previous cafe owner easily sold 1000 coffees per day, if not 1500. Rohit adds: "I think so too." Lee feels very positive about his venture after the meeting. He signs a standard lease agreement with Virat and Rohit the following week, agreeing to a 5-year lease starting 1 August 2022. Unfortunately, business for Lee is not as expected. In the first few weeks he sells around 150 coffees per day. His sales increase over the months but never reach more than 500 coffees per day. Lee feels cheated and calls Virat and Rohit to complain. During the phone call Lee says: "You knew that the lease was above my budget. You guaranteed me daily sales of at least 1000 coffees." Virat responds: "I have not guaranteed you anything like that. Read the contract that you have signed. Why would I guarantee you a certain number of sales? I don't even know whether you are a good barista." Lee has lost his confidence and wants to terminate the contract and/or seek damages. Advise Lee. Please use case law to support your answer. Lee dreams of opening an Asian inspired fusion café in Croydon. He is looking to take over an existing café that does not need any refurbishments from his side. He is lucky to find a recently closed café that had a similar business concept. He contacts Virat and Rohit, the joint owners of the property, to engage in lease negotiations. Lee discusses all necessary details with the owners. The lease is slightly above Lee's budget. However, Virat highlights the great location of the café. It is very close to Croydon station. During the meeting. Virat states: "Don't worry about the lease being slightly over your budget. It is a great spot. The previous cafe owner easily sold 1000 coffees per day, if not 1500. Rohit adds: "I think so too." Lee feels very positive about his venture after the meeting. He signs a standard lease agreement with Virat and Rohit the following week, agreeing to a 5-year lease starting 1 August 2022. Unfortunately, business for Lee is not as expected. In the first few weeks he sells around 150 coffees per day. His sales increase over the months but never reach more than 500 coffees per day. Lee feels cheated and calls Virat and Rohit to complain. During the phone call Lee says: "You knew that the lease was above my budget. You guaranteed me daily sales of at least 1000 coffees." Virat responds: "I have not guaranteed you anything like that. Read the contract that you have signed. Why would I guarantee you a certain number of sales? I don't even know whether you are a good barista." Lee has lost his confidence and wants to terminate the contract and/or seek damages. Advise Lee. Please use case law to support your answer.
Expert Answer:
Answer rating: 100% (QA)
In this situation it seems that Lee may have misunderstood the statements made by Virat and Rohit during their meeting regarding the previous caf owne... View the full answer
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Fundamentals of Cost Accounting
ISBN: 978-0077398194
3rd Edition
Authors: William Lanen, Shannon Anderson, Michael Maher
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