Commercial Lease Termination and Restraint of Trade Clauses in Australian Law

This article discusses the legal implications of commercial lease termination and restraint of trade clauses in Australian law. It includes case studies and legal analysis of early termination of equipment leases and fraudulent misrepresentation in trade and commerce. The article explains the concept of restraint of trade clauses and their enforceability under Australian law. It also discusses the legal obligations of individuals engaged in trade or commerce and the consequences of engaging in misleading or deceptive conduct. The article concludes with a case study on the breach of a contract involving a restraint of trade clause.

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Law

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Section C
Issue
The main issue in this case is whether any commercial lease was terminated validly in context of
failure of lessee to pay rent, and in case it is possible then what are the financial penalties for the
same.
Law
When any equipment lease come to an end before the end of its legal term, then it can be
assumed by the lessor that it will be entitled to claim an amount which includes the due related to
the rentals, due for the term, and such amount will rebated at present values till the date of
termination. Both, rebating and discounting will be done in terms of reflecting the time value of
the money. It also prevents the issues which deals with the fact that amount must include the
penalty also (E resources, 2008].
Early termination payout is considered by the law as “loss of bargain damages” in context of
lease agreements. Law states that party is under obligation to make the payment of loss of
bargain damages at that time when one party breach the essential term of the contract and
because of this another party rejected the complete contract. In other words, rejection of the
contract occurred when any term or condition of the contract which is breached by the defaulting
arty is that much essential and important that innocent arty will not entered into the contract
because of such breach (McDoughall, 2013].
In case lessee fails to pay the rent on time then it can be considered as the breach of essential
term of the contract in the lease of equipment. There are other conditions of the contract which
cannot be considered as essential terms. However, lessor may feel that any condition which
deprives the benefit of the lease will consider as essential condition (High court of Australia,
2008].
Section 117 of the Convenyancing Act 1919 states that any rent and the advantage of any
provision stated in the lease that “touches and concerns the land”, will runs with the land. In
other words, such provision must be inn the benefit of the land owner.
Application
In this case, Gumland Property Holdings Pty Ltd will buy the land from the Transit Management
Pty Ltd in terms of the commercial lease without taking the assignment of the lease. Because of
this there was no contractual relationship between the Gumland Property Holdings Pty Ltd and
the tenant. Later, tenant of the lease will fell behind the rent and and was consequently breach
the agreement. Current owner of the land sue the tenant and the guarantor under the lease.
High Court stated that payment of the rent was defined by the parties as a necessary term in the
lease, and general principles of the contract allowed the innocent party to end the contract and
recover the loss of bargain damages on the ground of repudiation or the fundamental breach of
the condition.

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Court further stated that both the arties use clear words for showing their intentions and the lease
agreement also provide the payment of the loss of bargain damages in case of termination of the
contract because of the breach of essential term of the contract.
In this context, Court consider the decision of the House of Lords in case law P & A Swift
Investments (A Firm) v Combined English Stores Group plc [1989] AC 632, and stated that the
right to get the loss of bargain damages related to the land and not personally to the transit.
Therefore, Gumland holds the right to recover the damages.
Conclusion
In this case, high Court allowed the appeal made by the Gumland and awarded all the damages
seek by the Gumland.

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Section D
This section defines the case law Google Inc v ACCC, High Court of Australia [2013] HCA 1
in context of fraudulent misrepresentation.
Issue
The main issue in this case whether Google had engaged in misleading and deceptive conduct in
terms of section 18 of the Australian consumer law by displaying the web address as the sponsor
link which display the name of the competitor
Law
Section 18 of the ACL states that any individual while conducting his actions in trade or
commerce must not engaged in any such conduct which is misleading or deceptive in nature or
might be misled or deceive any person. In other words, this section impose obligation on the
individual that they must not involve in any such conduct while performing the operation of their
business which misled or deceive consumers.
This concept is also recognized by the common law, which states that in case any person
engaged in the fraudulent misrepresentation for inducing the another person to enter into contract
then such contract is considered as invalid contract.
Application
Search engine of Google produce organic and sponsored links, and the sponsored links in these
are related to the aid advertisements. The sponsored links are reflected with the help of the
Google's AdWords program which utilize those keywords which are selected by the advertisers.
There are number of cases in which advertisers use the keywords which contain the name of the
competitors'.
In this case, trail judge stated that sponsored links can be considered as the fraudulent
representation because in which business falsely shows the connection between them and another
organization.
In the present case, Court held that Google itself not engaged in the misleading or deceptive
conduct and it only endorse or adopt the representation which is displayed by the Google on the
basis of its advertisers (High court of Australia, 2013].
In this case, Court allowed the appeal because of the different reasons. Court held that publishing
the advertisement on the behalf of the third party can contravene section 18 of the ACL on the
ground whether or not Google adopt the representation made by the advertisers. In this case,
Google search engine users do not consider these representations as misleading representations-
The facts of this case do not challenge the findings of the trail judge on the ground that ordinary
and reasonable users understood that sponsored links were those advertisements which are made
and aid by the advertisers, and these representations are not endorsed and doted by the Google.
These users would not understand the fact that Google is making these advertisements which are
considered as misleading or deceptive by the Trial Judge. In this ACCC does not make the
reliable central allegations on which this case depends (ACL, n.d.].

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Only on the ground that Google made the representations which are conveyed by the
advertisements, it is not possible to not allow the appeal of the Google. Only because of this
reason, Court allows the appeal of the Google.
Court also allows the appeal on the ground that there is no relevant ground on the basis of which
it is concluded that normal and relevant members believe that message is not created by the
Google.
Conclusion
In this case, High court upheld the appeal made by the Google on unanimous basis, which
means, Google will not be held liable for the sponsored links on which name of the Competitor
will displayed. Court further stated that Google itself not engaged in the misleading or deceptive
conduct and it only endorse or adopt the representation which is displayed by the Google on the
basis of its advertisers.
Section E
Issue
Whether it is possible for the Pedro to take action against the Lisa under the common law in
context of breach of the contract
Law
Restraint of trade clauses are considered as those practices with the help of which an individual
imposed the restriction on the free trade right of another individual. This condition is defined as
the restriction imposed by one arty on the free trade or any condition which limits the liberty of
the traders to buy and sell anything in free manner.
These clauses are defined as contractual clauses which are imposed on the business of the
individual. Restraint of trade clauses are generally stated under the sale/purchase agreements
(SPAs) for limiting the activities conducted by seller for restricting the competition occurred in
the business. This can be understood with the help of example; buyer wants to restrict the seller
from conducting the similar type of business in the similar geographical location within the
articular period of time.
However, competition law Act introduce number of provisions which ensure that traders are
completely free to choose with whom they want to contract without imposing any restriction in
terms of the contract. Because of this reason, any provision which want to restrain the right of
the traders or individuals will considered as unlawful provisions and also void in nature. In other
words, such provisions are not enforceable by law. However, court enforce such provisions if
such conditions are in the interest of the public and extend only u to that extend which is
necessary for protecting the legitimate interest of the buyer.

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However, Court holds the right to enforce these clauses if they believe that it is reasonable. Court
done this by referring the interest of both the parties and also determine that such enforcement
must not breach the interest of the public in terms of free trade.
This can be understood with the case law Buckley v Tutty (1971) 125 CLR 353 at 380, in which
Court held that those restraint of trade clauses which are not reasonable in nature will not be
enforced by the Court and the reason behind this is the contravention of the public welfare in
terms of free trade. Court also stated that such conditions prevent the individuals in exercising
their free trade rights.
Application
In the Present case, Pedro and Lisa were both engaged in the business of retailers who sell
imported French jewellery in Melbourne and Victoria. Later, Lisa enter into the contract of sale
of business with the Pedro and this contract include the condition that Lisa would not carry the
similar business at any lace in the Australia for at least 2 years.
After the year of this contract, Lisa starts new similar business in in Cairns and Queensland. this
case involve he laws related to the restraint trade clause. Restraint of trade clauses are considered
as those practices with the help of which an individual imposed the restriction on the free trade
right of another individual. Any provision which want to restrain the right of the traders or
individuals will considered as unlawful provisions and also void in nature. In other words, such
provisions are not enforceable by law. However, court enforce such provisions if such conditions
are in the interest of the public and extend only u to that extend which is necessary for protecting
the legitimate interest of the buyer.
It can be said that this clause stated under the contract will not be held reasonable and because of
this, Lisa is not bound by the contract.
Conclusion
Pedro cannot take any action against the Lisa for the breach of the contract.
References
ACL. Google Inc v ACCC, High Court of Australia [2013] HCA 1. Retrieved from
https://www.australiancontractlaw.com/cases/google.html.
Buckley v Tutty (1971) 125 CLR 353 at 380.
Convenyancing Act 1919- Section 117.
E resources, (2008]. Gumland Property Holdings Pty Ltd V Duffy Bros Fruit Market
(Campbelltown) Pty Ltd, Ferdinando Pisciuneri And Natale Pisciuneri. Retrieved from
http://eresources.hcourt.gov.au/downloadPdf/2008/HCA/10.
Google Inc v ACCC, High Court of Australia [2013] HCA 1.

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High court of Australia, (2008]. Gumland Property Holdings Pty Ltd V Duffy Bros Fruit Market
(Campbelltown) Pty Ltd, Ferdinando Pisciuneri And Natale Pisciuneri. Retrieved from
http://www.hcourt.gov.au/assets/publications/judgment-summaries/2008/hca10-2008-03-
27.pdf.
High court of Australia, (2013]. Google Inc v ACCC, High Court of Australia [2013] HCA 1.
Retrieved from
http://www8.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/HCA/2013/1.html.
Inbrief. What are Restraint of Trade Clauses and are they Legal?. Retrieved from
https://www.inbrief.co.uk/regulations/restraint-of-trade-clauses/.
McDoughall, A. (2013]. Damages for early termination of equipment leases. Retrieved from
http://pigott.com.au/publications/damages-for-early-termination-of-equipment-leases/.
P & A Swift Investments (A Firm) v Combined English Stores Group plc [1989] AC 632.