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Acceptance of an offer for a lease.

03/06/2011

A recent case exemplifies how a Court is likely to approach an allegation that a lease offer has been implicitly accepted by subsequent conduct.

A landlord of commercial premises invited a lease proposal from a prospective tenant.  They exchanged correspondence and their representatives met on site to discuss terms. The landlord’s solicitor provided a draft lease. The tenant paid a deposit which was, in part, non-refundable.  A dispute arose about the date for lease commencement.  The prospective tenant claimed that a bargain had been struck, as evidenced by the landlord retaining the deposit and delivering a draft lease.

However, the Court found as a matter of fact, that the landlord had done nothing to manifest an acceptance of a proposal put forward by the prospective tenant.  The deposit was paid in anticipation of an agreement.  Its retention pending execution of the lease did not, of itself, constitute acceptance of any offer. Nor did it disclose an apparent consensus about the terms of the offer.  After all, the very point of the offer was to advance a proposal for the landlord’s further consideration.

A covering letter made it clear that the draft lease was provided in anticipation of, and subject to, the landlord’s consideration and approval.  It contained terms which were inconsistent with the tenant’s proposal.  Neither party intended to be bound by the issue of that document.

Read the full judgement of the Queensland Supreme Court in Highgrove Bathrooms Townsville Pty Ltd v Serobotto Nominees Pty Ltd.

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