Contract Law 2017 Assignment: Sophie's Lease Renewal Dispute

This assignment analyzes a contract law case involving Sophie and Coronet Casino concerning the renewal of a lease. The assignment addresses two key issues: whether a collateral contract or promissory estoppel prevents Coronet Casino from refusing the lease renewal based on pre-contractual statements, and whether Sophie can stop the refusal based on the terms and consideration of the contract. The analysis explores the concepts of collateral contracts, promissory estoppel, breach of contract, and remedies like specific performance and damages, referencing key legal precedents such as Heilbut Symons & Co v Buckleton, Central London Property Trust Ltd v High Trees Ltd, Crown Melbourne Limited v Cosmopolitan Hotel (Vic) Pty Ltd, and Addis v Gramophone. The conclusion states that Sophie's claims would likely fail due to the vague nature of the promise and the breach of contract by Coronet. The assignment also considers the application of breach of contract principles, including the availability of remedies such as specific performance, rescission, and injunction. The assignment concludes with a comprehensive bibliography of relevant legal resources.

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Question 1
Issue
Whether Sophie can stop Coronet Casino from legally refusing the renewal of lease based
on the statement made while the original lease was being negotiated, or not?
Rule
A collateral contract can be defined as a separate contract which runs parallel to the
original contract. In general, it is a single term contract in which the agreement terms are based
on contract1. Lord Moulton, in Heilbut Symons & Co v Buckleton2 provided that collateral
contract is such promise which fails to be a part of the main contract and is enforceable through a
collateral contract being drawn. This contract is evidenced on the basis of principle and authority
and the consideration is made in the main contract or in some other contract. So, the collateral
contract is a complement to the main contract and at the same time, has independent existence
and its status or character is not doubted for its legal validity3.
Promissory estoppel is another key concept under the contract law which stops a person
from going back on the promise which had been made by the promisor and where the promisee
relies upon such promise in such a manner that a subsequent withdrawal of this promise would
be in detriment to the person relying upon such promise. In such cases, the promise is applied
even when a formal consideration is absent4. This concept was revived through the obiter
1 Jill Poole, Casebook on Contract Law (Oxford University Press, 12th ed, 2014)
2 [1913] AC 30
3 Richard Stone and James Devenney, Text, Cases and Materials on Contract Law (Routledge, 3rd ed, 2014)
4 Paul S Davies, JC Smith's the Law of Contract (Oxford University Press, 2016)

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statement made in Central London Property Trust Ltd v High Trees Ltd5 by Denning J, where the
defendant would be made liable had they claimed the reduced rent for the promised period6.
A key case which revolves around these two concepts is the recent case of Crown
Melbourne Limited v Cosmopolitan Hotel (Vic) Pty Ltd7. This case covers a crucial decision
regarding the promissory estoppel and collateral contracts based on pre-contractual negotiations
and a possible defence which can be cited using these two concepts. In this case also, a statement
was made regarding the tenant being “looked after at renewal time” by the Crown when the
initial five year period lease was being offered. The High Court in this case stated that the
statement which was made by the Crown did not give rise to a collateral statement, in addition to
the estoppel claim being invalid. The reason for this was the requirement for the representation
made to be clear, precise and unambiguous. This statement was deemed as nothing more than
“vaguely encouraging” which led to the tenant not being entitled to claim damages from the
Crown8.
Application
In this case, Sophie can claim that a collateral contract had been formed as the promise
was made during the pre-negotiations of the original lease, where she was promised to be looked
after when the renewal period fell due. This was a term incidental to the main contract but not
covered under the main contract, thus making it a collateral contract as per Heilbut Symons & Co
v Buckleton. Applying the promissory estoppel, if Coronet Casino is not stopped from going
5 [1947] KB 130
6 Catherine Elliott and Frances Quinn, Contract Law (Pearson Education Limited, 9th ed, 2013)
7 [2016] HCA 26
8 Roger Cohen, Looked after at renewal time - did the disappointed tenant have a claim? (22 August 2016)
<https://www.lexology.com/library/detail.aspx?g=996643f6-c48d-4fcd-a9c0-723e263b8ddb>

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back on their promise, it would be unfair on Sophie, so Coronet Casino must be stopped using
this concept as per the case of Central London Property Trust Ltd v High Trees Ltd.
However, this claim of Sophie would fail due to similarity between her case and the case
of Crown Melbourne Limited v Cosmopolitan Hotel (Vic) Pty Ltd. As was held in this case by the
High Court, the term “would be looked after at the renewal time” is vague and unclear as it is
nothing more than “vaguely encouraging”.
Conclusion
To conclude, the claims of Sophie would not succeed against Coronet Casino due to the
unclear promise, which cancels out the applicability of collateral contract and promissory
estoppel. And so, Coronet Casino cannot be stopped from legally refusing the renewal of lease.
Question 2
Issue
Whether Sophie can stop Coronet Casino from legally refusing the renewal of lease based
on the terms and consideration revolving around the case study, or not?
Rule
A contract is a promise to fulfil the obligations covered under the terms, where one party
is to pay the consideration amount and the other party is to do the task as per the contract. The
formation of any contract requires certain key components, included in which are offer,
acceptance, clarity regarding terms of the contract, capacity, consideration and intention. Once

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an offer is made, it is to be accepted by the other party9. Felthouse v Bindley10 cannot be deemed
as an acceptance to a particular offer and the same has to be accepted clearly.
The terms of the contract have to be followed. In case the same is not done, it could lead
to the contract being terminated as a result of the breach of contract. In simple terms, when one
of the parties to contract fails to fulfil the terms on which the contract was drawn, the contract is
deemed to have been breached. When a condition stated under a contract is breached, the
aggrieved party gets the right to terminate the contract or can apply for damages11. The other
remedies which are available for the breach of contract include specific performance, rescission
of contract or injunction. An injunction is to be sought when a contractual right is being
infringed. Damages are awarded in such cases where the person who was harmed was required to
be put in a place where they had been in case the contract had been performed as per Addis v
Gramophone12. And where the damages are not an adequate remedy, the court may ask for
specific performance of the terms of the contract13.
Application
In the given case study, one of the terms is for Coronet to bring high rollers for Sophie
for a minimum 20 nights in every month. However, this term was not fulfilled by Coronet. This
allows Sophie to raise a claim of breach of contract by Coronet and claim damages in terms of
monetary compensation so that based on Addis v Gramophone, she would be put in such
financial position, where she would have been in case these high rollers had come to her as she
would have earned revenues from such occurrence. Also, Sophie can apply for specific
9 Andy Gibson and Douglas Fraser, Business Law (Pearson Higher Education AU, 2013)
10 (1862) 142 ER 1037
11 Neil Andrews, Contract Law (Cambridge University Press, 2nd ed, 2015)
12 [1909] AC 488
13 Paul Latimer, Australian Business Law 2012 (CCH Australia Limited, 31st ed, 2012)

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performance of Coronet regarding the lease being extended as the breach was on Coronet’s part
and not on part of Sophie. Sophie can also choose to rescind the contract as a condition under the
contract had been breached and if Coronet denies the extension, seek an injunction order against
Coronet from doing so. But, that would not allow her to get the lease renewed, so the best option
is to claim compensation and seek specific performance on part of Coronet for extension of
lease.
Coronet can also make a claim in this case, for the non payment of the full rent by Sophie
based on specific performance. Non-performance by one party does not allow the other party to
stop performing their side of the contract. Also, the parties had not agreed on the reduced rent
and a silence of Coronet does not mean they accepted the reduced rent. So, Sophie was required
to pay the full rent as no new agreement or a collateral contract had been drawn, which could
give rise to a promissory estoppel.
Conclusion
Hence, Sophie can stop Coronet Casino from legally refusing the renewal of lease based
on the breach of contract by Coronet and applying for specific performance for extension of
lease and damages for the loss of revenue.

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Bibliography
A. Articles/ Books/ Reports
Andrews N, Contract Law (Cambridge University Press, 2nd ed, 2015)
Davies PS, JC Smith's the Law of Contract (Oxford University Press, 2016)
Elliott C, and Quinn F, Contract Law (Pearson Education Limited, 9th ed, 2013)
Gibson A, and Fraser D, Business Law (Pearson Higher Education AU, 2013)
Latimer P, Australian Business Law 2012 (CCH Australia Limited, 31st ed, 2012)
Poole J, Casebook on Contract Law (Oxford University Press, 12th ed, 2014)
Stone R, and Devenney J, Text, Cases and Materials on Contract Law (Routledge, 3rd ed, 2014)
B. Cases
Addis v Gramophone [1909] AC 488
Central London Property Trust Ltd v High Trees Ltd [1947] KB 130
Crown Melbourne Limited v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26
Felthouse v Bindley (1862) 142 ER 1037
Heilbut Symons & Co v Buckleton [1913] AC 30

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C. Legislations
Contract Law
D. Others
Cohen R, Looked after at renewal time - did the disappointed tenant have a claim? (22 August
2016) <https://www.lexology.com/library/detail.aspx?g=996643f6-c48d-4fcd-a9c0-
723e263b8ddb>