Business Law Case Study: Lease Renewal and Termination - GUCC vs Baez

This case study analyzes a business law dispute between GrabUrCash Casinos Pty Ltd (GUCC) and Salt Baez concerning a restaurant lease. The core issues revolve around the renewal and termination of the lease agreement. The analysis references several key legal precedents, including Crown Melbourne Limited v Cosmopolitan Hotel, Inwards v Baker, Giumelli v Giumelli, Legione v Hateley, Sargent v ASL, Waltons Stores (Interstate) Ltd v Maher, and Austotel v Franklins Selfserve Pty Ltd, to determine whether GUCC is obligated to renew the lease and if they can terminate it before the agreed-upon time. The student argues that GUCC is not bound to renew the lease due to the vague nature of their representation and that GUCC waived their right to terminate the lease by accepting rent despite Baez's failure to meet the renovation deadline, leading to the conclusion that Baez cannot renew the lease, but GUCC cannot terminate it early.

Running head: BUSINESS LAW
Business law
Name of the Student
Name of the University
Author Note

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Issue
1. Whether the lease between GUCC and Baez can be renewed
2. Whether the lease between GUCC and Baez can be terminated before time
Rule
In the recent case of Crown Melbourne Limited v Cosmopolitan Hotel (VIC) Pty Ltd &
Anor [2016] HCA 26 the question before the court was to determine whether a promise which
has not been incorporated in writing into a lease contract can be binding on the parties in term of
renewal or not. This was a significant case in relation to the doctrine of estoppel. The court in
this case considered that whether a verbal assurance provided in an informal manner by a land
lord to the tenant at the time of negotiation was enough to bind the landlord to grant an option to
renew the lease for a further period. In this case the tenant had requested for a long lease during
the time of negotiation. The renewal clause was not documented by the landlord however a
representation was made by them that the tenant would be “looked after at renewal time”. The
court in this case found that there was no collateral contract between the parties as the statement
cannot be understood by the application of the objective test to be a binding term of contract and
was a mere vaguely encouraging statement. The claim for estoppel was also held not be succeed
as the statement was not adequate to convey to a reasonable person that a future lease would be
granted without a doubt. This was because the court was not able to find that the party relied on
the representation to get into the contract.
Inwards v Baker (1965) 2 QB 29 is another famous case in Australia where it was provided by
the court that even if a contract is not created between the parties the doctrine of promissory

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estoppel can be used by the court. However there must be a significant promise made by a party
and not a merely vague statement.
Giumelli v Giumelli [1999] 196 CLR 101 is a case where it had been provided by the
court that equitable interest can be given to the aggrieved party instead of the application of the
doctrine of promissory estoppel in the ends of justice where the doctrine cannot be applied.
In the case of Legione v Hateley [1982] 152 CLR 406 it was provided by the court that a
mere statement cannot be regarded as a contractual representation if they are vague and unclear.
In this case a statement provided by the secretary that “I think that’ll be alright, but I’ll have to
get instructions” was interpreted by the as non-binding as the position was left undetermined till
further instructions was received by the secretary. Thus the claim made by the plaintiff relying
upon such statement was abolished by the court.
In the case of Sargent v ASL [1974] HCA 40 it question before the court was to
determine the termination of a contract. In this case the contract between the parties had a term
which stated that the contract can be rescinded if a specific condition in relation to contract is not
fulfilled. The defendant in this case had clear knowledge that the condition had not been fulfilled
but still took the benefits of the contract in form of rent for a period of two years. The defendant
then suddenly rescinded the contract. The court ruled that the recession is not valid as the actions
of the defendant as her actions waived her right and resulted in an irrevocable affirmation of the
contract.
In the case of Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7 the question before the
court was related to promissory estoppel. In this case the defendant had not signed the lease but
and kept the plaintiff under an apprehension that the deal is on and relying on such apprehension

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the plaintiff committed an act to its detriment. The court held that the defendants are not entitled
to rescind the contract because of their actions as equity would intervene.
In the case of Austotel v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582 it was ruled by the
court that where the parties to the contract refused to committee to a term of a contract
deliberately it is not unconscionable for one of the party to rescind the contract. In addition it was
said by the court that it is not right for the court to settle a term which was left open deliberately
by the parties to the contract.
Application
In the given circumstances there is a lease between GrabUrCash Casinos Pty Ltd (“GUCC”) and
Salt Baez in relation to a restaurant in the casino. GUCC had made it clear to Baez that the lease
as about to expire in 2016. A new lease was presented to Baez by GUCC which did not have any
term related to renewal. It was further provided in the lease that a three months prior notice
would be provided to Baez in relation to whether the lease would be renewed or terminated and
on what basis. When Baez insisted for a renewal term, GUCC representatives said him that
“we’ll look after you at renewal time.” These circumstances can be compared to that of the
Crown case discussed above as they have similar facts. Applying the principles provided by the
case to the facts of the present scenario it can be stated that the representation made by GUCC in
relation to the renewal of lease had not been documented and was mere vague encouragement as
in the crown case. Therefore a reasonable person would use it as a reliance to get into the
contract. Thus it can evidently be aid in this case that GUCC has the right to refuse the renewal
of lease.

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There was an additional term in the lease according to which if Baez was not able to complete
the renovation work within three weeks and start the operation of the restaurant than he would be
liable to leave the premises upon notice within twenty-one days. However as Baez did not
receive proper material he was not able to finish renovation. Upon contact with GUCC’s
secretary in relation to notifying about the delay Baez was informed that “I think that’ll be
alright, but I’ll have to get instructions”. The circumstances are similar to that of the Legione
case and similarly the representation cannot be used by Baez to cover up for the delay caused to
the opening date.
However the notice of termination was never sent till four years of the lease was completed and
GUCC continued to take benefits of such lease. They then asked Baez to leave the premises as
they wanted to exercise the right to termination for the breach of clause 29.3 in relation to the
opening day. Comparing the circumstances with sergeant case, it can be ruled that they GUCC
cannot terminate the lease before time as they were already receiving benefits from Baez even
after knowing the clause was breached.
Conclusion
Baez has no right to renew the lease with GUCC.
GUCC cannot terminate the lease before time

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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
Giumelli v Giumelli [1999] 196 CLR 101
Inwards v Baker (1965) 2 QB 29
Legione v Hateley [1982] 152 CLR 406
Sargent v ASL [1974] HCA 40
Waltons Stores (Interstate) Ltd v Maher[1988] HCA 7