Business Restrictions

Following the declaration of the COVID-19 Pandemic and the imposition of restrictions on businesses by the Government, Barney, owner of Barney’s Burgers was initially forced to close his business.  At the end of March, he told his landlord, Ruth, that he would likely have to declare bankruptcy because he could not pay the rent.  Ruth said she would reduce the rent from $3,000.00 to $500.00 to help him out and suggested that he try curb side delivery.  Barney paid her $500.00 and hired back staff for curb side delivery.  Sales were 25% of his former sales. Six months later, restrictions were lifted and Barney went to Ruth’s office with a big smile and gave her a cheque for $3,000.00 for the monthly rent.  Ruth said “Where is the $15,000.00 for the other 6 months?”  Barney was surprised; he replied, “I thought you had forgiven me that rent because of the pandemic.”  Ruth said, “Of course not, I only delayed payment until the pandemic ended.  You still owe me the money.”  Barney disagreed and said he did not owe any arrears of rent and would not pay it since they had a binding agreement for the lower amount. Ruth claims there was no binding agreement to lower the rent. Required:  Discuss the legal issues which will be raised by the parties with reference to the applicable principles.  What is the likely result?

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