Business Law: Analysis of Lease Agreement, Estoppel, and Contract Law

This report analyzes a business law case involving Coronet Casino and Loire Hotel. The first issue addresses whether Loire has the right to renew its lease based on assurances made by Coronet's agent, Sophia. The analysis considers the parole evidence rule, collateral contracts, and promissory estoppel, referencing cases like Crown Melbourne Limited v Cosmopolitan Hotel. The conclusion is that Loire cannot claim promissory estoppel or a collateral contract for lease renewal. The second issue examines whether Coronet can terminate the lease due to Loire's failure to meet certain terms, specifically regarding guest accommodation. The analysis considers the concept of waiver and the case of Sargent v ASL. The report concludes that Coronet waived its right to terminate the lease by not addressing the rent shortfall and continuing to accept benefits, aligning with the principles of promissory estoppel as seen in Waltons Stores (Interstate) Ltd v Maher. The report provides a comprehensive legal analysis supported by relevant case law and legal principles.

Running head: BUSINESS LAW
Business law
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Author Note

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Issue 1
The issue in this case is to evaluate the chances of Coronet Casino with respect to
refusing the lease provided to Loire.
Rule
As per the parole evidence rule when a written contract has been made and all the terms of the
negotiation has been documented a party cannot rely on the terms which were discussed during
the negotiation and have not been added to the written contract as per the case of
Collateral contract are contracts which act as a defense to the parole evidence rule. A collateral
contract is a subsidiary contract which is made in relation to entering into the primary contract.
however as provided by JJ Savage & Sons Pty Ltd v Blakney1 the terms of the collateral contract
cannot be inconsistent with the primary contract.
In the case of Van den Esschert v Chappell2 it was held by the court that as the statement
made by the defendant was promissory in nature and not inconsistent with the main contract a
collateral contract is formed.
In the case of Crown Melbourne Limited v Cosmopolitan Hotel (VIC) Pty Ltd & Anor3 decided
by the high court the issue which the court had to identify was in relation to the when a term is
said to be incorporated into a contract. In this landmark case the court provided the importance
of documenting a provision in relation to the renewal of a lease and the consequences of not
doing so. The facts of the case provide that the defendant had made a statement to the plaintiff
which stated that he would be taken care upon at the time of renewal but the contract did not
1 (1970) 119 CLR 435
2 [1960] WAR 114 text 127
3 [2016] HCA 26

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contain a term related to renewal. The two question which the court had to analyze in the case
was whether there was a collateral contract between the parties in relation to the statement of
renewal and whether promissory estoppel would intervene in this case and make the defendant to
renew the lease. The court provided that there was no collateral contract as a reasonable person
would not be induced by such terms was is vague encouragement to get into a contract. In
addition the court provided that promissory estoppel would not intervene as the statement cannot
be regarded as a promise.
In the case of Austotel v Franklins Selfserve Pty Ltd4 Kirby P, ruled that where a party has
expressly refused to provide its commitment in relation to a term of the contract in a deliberate
manner, it would not account to unconscious ability on the part of one of the parties to the
contract to repudiate the contract. in addition it was provided by Rogers AJA that it is not correct
for the court to determine the settlement of a term which the parties to the contract left open
intentionally.
Application
In the given scenario it has been provided that Coronet Casino have leased one of its
premises to the hotel named Loire for a period of two years. According to the lease the hotel had
to undertake refurbishment in relation to the building which has been leased. The lease did not
provide any right to other party to renew the lease. However it had been provided by Sophia who
was an agent of Coronet that “You don’t need to worry, it is in our interest for you to be
operating this hotel. We are in this for the long haul. You will be looked after at renewal
time.”
4 (1989) 16 NSWLR 582

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Firstly as per the provisions related to promissory estoppel provided through the recent crown
case which has almost same facts when compared to the facts of the present case in had it can be
stated that the Loire would not have the right to claim promissory estoppel against the promise
made by Coronet which stated that Loire would be “looked after at renewal time”. This is
because a reasonable person would have not considered the assurance provided by Coronet as a
promise because not only it is unclear and vague but also can be easily identified as being a
merely an encouraging representation as it was held in the crown case.
In addition it can be stated as per the principles of the above discussed cases that there was no
collateral contract which had been formed between Coronet and Loire hotel. This is because no
reasonable person would be induced by the vague assurance provided by Coronet to get into a
contract. Thus there is no collateral contract also in relation to the renewal of lease.
Conclusion
Lorie does not have the right to renew the lease depending upon the assurance provided by
Coronet.

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Answer 2
Issue 2
In this section of the paper the issue is to evaluate whether Lorie can renew the lease in relation
to the facts of the case.
Rule
In the famous case of Sargent v ASL5 the court had to address an issue related to the termination
of a contract. According to the facts of the case the defendant who was also the land lord had
specified in the lease that the lease would be terminated if it is found that the the land is affected
due to its use. The defendant had the knowledge that the land had been affected but did not send
any notice for the termination of the lease. After two and a half years he had been suggested by a
their person that he is entitled to end the lease as the term has been violated. The court in this
case ruled that as no notice of termination had been sent by the defendant for a period of two and
a half years and in addition the defendant continued to take rent from the plaintiff he waived the
right to terminate the lease as his actions unequivocally affirmed the lease.
In another case Waltons Stores (Interstate) Ltd v Maher6 the court had to determine whether the
doctrine of promissory estoppels can be claimed by the plaintiff or not against the defendant. In
the case the plaintiff and the defendant were negotiating a deal in where a building had to be
demolished by the plaintiff. The defendant did not sign the lease and the plaintiff thinking that
only formalities are left demolished the building. Latter the defendant did not approve the lease.
5 [1974] HCA 40
6 [1988] HCA 7

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The court in this case ordered according to the provisions of equality and promissory estoppel
that the defendant would be stopped from rescinding the contract.
Application
According to the facts of the case it has been provided clearly that provided that Loire had the
right to renew the lease but for that they had to company with the additional terms provided in
the lease. According to that additional term Coronet was supposed to provide accommodation to
the high rollers along with other corporate guests in the hotel for a minimum of 20 nights a week.
However after three months have been passed in relation to the lease Lorie complained that the
minimum amount of night were not been booked by Coronet for the accommodation of the
guests as agreed by the lease. the shortfall had then been deducted by the hotel in form of the
fourth month. Even through the decision was not expressly agreed by Coronet they did not raise
the issue any further.
Through the application of the provisions provided in the ASL case relation to this scenario it
can be said that Coronet have waived the right to claim that the condition of the lease had not
been fulfilled as the plaintiff has not given the fourth month rent because they did not raise the
issue any further and thus affirmed the contract. This can be said because in the same way in the
ASL case even when the defendant had the knowledge that the term of the lease has been
violated they did not take any action and continued to receive the benefits of the lease which
made them unequivocally affirm the contract even after the breach. The same thing has been
done by Coronet in this case as knowing that the hotel has not paid the rent for the fourth month
as such rent has been deducted upon the mistake on the part of Coronet itself, they did not raise

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the issue any further and continuing to keep the lease is operation they lost their right to make a
claim for breach.
In addition as per the principle of the Maher case discussed above not signing a lease and
keeping the other party under the apprehension that the deal is on gives right to the other party to
bring in force the doctrine of promissory estoppel against the first party not to repudiate the
contract. In the same way in the present case even where Coronet disagreed to the reduction their
right was waived in relation to not renewing the lease.
Conclusion
Therefore it can be concluded that as per the facts of this case Coronet lost its right of not
renewing the lease by not raising the issue in relation to the fourth month’s rent and continuing
to receive the benefit under the lease.

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Bibliography
Austotel v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582
Crown Melbourne Limited v Cosmopolitan Hotel (VIC) Pty Ltd & Anor [2016] HCA 26
Esschert v Chappell [1960] WAR 114
JJ Savage & Sons Pty Ltd v Blakney (1970) 119 CLR 435
Sargent v ASL [1974] HCA 40
Waltons Stores (Interstate) Ltd v Maher[1988] HCA 7