Understanding Business Law For Commercial Tenants

Commercial Tenants’ Rights

Discuss about the Business Law for Commercial Tenants.

There are laws that govern the relationship between a tenant and a landlord. Basically each country has its own laws concerning commercial tenants and the rights that they enjoy. A contract between a landlord  and a tenant whether reached verbally or under a written lease is among the most important deals in many states (Emerson, 2009).In any lease contract, the rights of a tenant are set out in state specific legislations. For example Retail Leases Act 1994 states clearly the rights of a tenant .This is among other legislations that are enacted to ensure that the rights of tenants are not violated as it would be the case in the absence of such legislations.

Under this legislation, a couple of tenant’s rights are provided .Among them is the right not to pay undisclosed amounts of money to their landlords. In Australia, provided under tenants rights is rent control regulation which regulates the amount of rent that a landlord may charge tenants. It also prohibits them from evicting their tenants (Latimer, 2011).

A lease denotes a contract between a Landlord and a tenant which contains their terms and conditions of rental .A lease can only be changed in the event that both parties arrive at a consensus on the change .The change can then be termed as valid .However in the event that one of the parties does not agree to the changes, it can be deemed as invalid (Jones, 2013).  For rent changes, either an increase or a reduction, there has to be a mutual agreement by both parties.

There are also guidelines on the termination of a contract between the land lord and a tenant. Basically if any of the parties wishes to terminate their contract with the other, the law requires them to give at least a one month notice to the other party. They do not need to give the reason for the termination of the contract but only a 30 days’ notice.

We can therefore say that Lisa was not contractually obliged to pay rental arrears for the last two months and half for a number of reasons .First a stated above there needs to be consent for any changes on rent to be arrived at. After a period of poor business performance , Lisa requested a reduction of rent from the initial $850 to $550 on which the landlord agreed .This was therefore mutually arrived at and it was not justifiable for the land lord to demand arrears accumulated for the last two and half years yet there was an initial agreement on rent reduction. The demands by the landlord were based on the wrong reasons because he decided to raise the issue after learning of the tenant’s desire to move to a new residence.

Lease Contracts and Rent Control

Additionally there is no regulation that prohibits a tenant from relocating to a new residence of their choice provided they give notice to their landlords. The law also states that tenants will be allowed to pay disclosed amounts as rent for the leased premises .Had the landlord disclosed that Lisa would be required to pay forgone amounts of rent as accumulated debt at a later date and Lisa had agreed to it then she would be having an obligation to pay. 

For any contract to be termed as biding to both parties there are supposed to be initial agreements by both parties on features of the contract. Unless these are met the contract can be said to have been violated (Gulshan, 2009). The case between   Allen Family Homes Pvt Ltd and Lisa is a case of unmet expectations. This means that the contract or agreement between her and the company was violated .With this as the case ,it is clear that Had a Valid contractual claim against Allen Family Homes Pvt Ltd. Lisa on her visit the company’s premises was shown an artist’s impression of a house which she desired because of its vast features .Actually what prompts her to pay some deposit for her anticipated new home are the features contained in the artistic impression of the house that she intends to be built for her .These features include a garden Landscape, bathroom fixtures and kitchen appliances. This means that she was not only interested in a residential house but a house that suited her expectations. The fact that the contractor consented to proceeding with the contract means that he or she had agreed to meet the expectations of the client.

The law prohibits provision of any deceitful information about products to consumers. The fact that the artist impression contained features that were left out in the actual home after construction meant that deceitful information was provided. This was also the case with the train station which she discovered much later that it was going to be implemented in 2030.

In a contract, one party agrees to do something for the other at an agreed price .Such an agreement can either be oral or written .Incase one of the parties fail to perform in accordance with the terms of the contract, this is referred to as a breach of contract. A party can be sued for a breach of contract (Rush & Ottley, 2006).

Termination of Contract

In such transactions it can also be argued that there was some form of fraud. In contracts fraud can be established in incidences such as where there is an intentional misrepresentation about a given product or service .The features in the artistic impression of the house was a misrepresentation of the actual features that were contained in the constructed house. It can also be trough suppression of truth about a particular product or something that touches on it. As in this case, the builder concealed important information about the train station which was not in line with the expectations of Lisa. Fraud can also be in form of false promises, this is where someone promises to do something for another but fails to honor the promise. By signing a contract with Lisa, the contractor agreed to offer what Lisa desired .However by building a different house from the one contained in the drawing presented to Lisa during her visit to the Company’s premises, the builder can be said to have deceived Lisa .The above exposition is a clear indication that Lisa has a Contractual claim against Allen Homes Pvt Ltd

Any Contract of employment is also guided by certain regulations .The rights and obligations of both the employer and the employee are clearly specified. An employer can choose to restrict their employees from working for their competitors by including restrictions within the employment contact (Dransfield, 2003).  This meant to prevent an employee from leaking out important information and knowledge about their employer to the competitors which would be disadvantageous to their former employer .Based on this we can say that Lisa has a Contractual Right to stop Ashley from working for a Competing Coffee shop in the same shopping complex.

This is what is commonly referred to as restrictive covenants .Such are enforceable where the interest that the employer desires to protect is legitimate and where the employer can prove that the restriction is necessary in order to protect that interest . Restraint of Trade Act 1976 which allows enforcement of reasonable restraint

Working for a competitor in the same locality will mean that Ashley will transfer the skills and experience gained from Lisa’s coffee business to a competitor .It also means that Ashley might also move with some clients from Lisa’s business to the competitor thus reducing Lisa’s customer base as well as sales profits and hence leading to the overall deterioration of Lisa’s coffee business .basically there are a number of recognized restrictive covenants .Non –solicitation restrictive covenant is one that prevents an employee from pursuing former employer’s clients  and suppliers with whom they had established contacts during his or her employment. Non-compete covenants prohibits employees from establishing their own businesses similar to those of the employer, also prevents them from working for competitors and approaching clients (Twomey & Jennings, 2010).

Since Ashley had an agreement with Lisa that prevented her from working for other competitors, we can say that she had entered into a non-compete covenant by which she was required to abide.

For such an agreement to be termed as effective however, it has to be in exchange for something .It should not also be limiting the possibility of an employee to earn a living. It also has to be supported by consideration at the time when it was signed and should be reasonable .In this regard it we can assume that what was offered in exchange of the agreement was the promise to move with Ashley to the new Location when it was necessary. This was a promise of continuation of employment contract regardless of the shift in geographical location. It also did not limit Ashley’s rights to earn a living. Had she been fired and told not to work for a competitor, we would say that the agreement was limiting her right to earn a living.

Based on the above explanations it can be concluded that Lisa had a contractual right to stop Ashley from working for a competitor in the same shopping Complex because this was a violation of the initial agreement.

References:

Emerson, R. W. (2009). Business law. Hauppauge, N.Y., Barron’s Educational Series

Gillies, P. (2004). Business law. Sydney, Federation Press

Rush, J., & Ottley, M. (2006). Business law. London, Thomson.

Dransfield, R. (2003). Business law made easy. Cheltenham, UK, Nelson Thornes.

Jones, L. (2013). Introduction to business law.

Abbott, K., PEndlebury, N., & Wardman, K. (2007). Business law. London, Thomson.

Marsh, S. B., & Soulsby, J. (2002). Business law. Cheltenham, Nelson Thornes.

LAtimer, P. S. (2011). Australian business law 2012. North Ryde, N.S.W., CCH Australia.

Gulshan, S. S. (2009). Business law. New Delhi, Excel Books.

Twomey, D. P., & Jennings, M. (2010). Business law: principles for today’s commercial environment. Mason, OH, South-Western Cengage Learning.

Bagley, C. E., & Dauchy, C. E. (2012). The entrepreneur’s guide to business law. Mason, Ohio, South-Western.

Cross, F. B., Miller, R. L., & Cross, F. B. (2009). The legal environment of business: text and cases : ethical, regulatory, global, and e-commerce issues. Mason, OH, South-Western Cengage Learning.