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27 Jan 2014 7 Respondents
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By David Seedhouse
VX Community
Genius (55662 XP)
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IPE 203: REASONABLE EXPENSES?

IPE 203: REASONABLE EXPENSES?

You are employed by Company X in Australia as a management consultant. You are leading a small team of consultants working with a client, Company Y in the U.K. As a part of the contract with Company Y your team will be reimbursed their living expenses in London for a three month 'on site' stint. The contract specifies that you need to make every ‘reasonable effort’ to sign a short-term lease (13 weeks) and reduce costs related to your accommodation expenses as much as possible. The contract does, however, have a clause allocating sufficient funding for you and your team to sign a lease for 26 weeks if necessary, since Company Y recognise that finding short-term accommodation in London is not easy - most landlords insisting on a 6 month contract .

You have known Andy, one of the team, for 5 years and you are fairly good friends now. Andy is originally English and tells you that he has a network of people who can help find accommodation. After a few days Andy comes back to you saying that his network has only been able to find an apartment with a 26 week lease. The cost of the lease - for a flat for five people - is $26,000, the exact maximum amount of money that has been allotted to you for housing expenses. Andy says he has been to see it and it is a good apartment and he advises that you sign the lease there and then - he has it in front of you - or else you will lose the apartment; such is the pressure on housing in London, where apartments can be on the market for hours rather than days before being snapped up.

According to information that you have received from other professionals in Company X who have travelled to London, it should have been possible to find a short-term lease for quite a bit less money.

Should you risk insulting Andy by not accepting the apartment arranged by his network? Or should you snap it up?

It is proposed that you sign the lease immediately

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