Commercial Property Blog

Legal Tips and Traps

Make your intentions clear! The risk with informal dealings

Posted by Dean Claughton on 28 May 2015

Did you realise that you can be locked into a commercial Lease without even signing the papers? If you’re shaking your head, you need to take a look at the case below.

Commercial property owner, Priolo Corporation Pty Ltd, leased a property to Vantage Systems Pty Ltd, including six car parking spaces on the property.

With the original Lease due to expire, discussions began about a new Lease. Priolo emailed a proposal to Vantage, later revising the proposal for Vantage to consider.

The revised proposal covered all typical Lease details but mistakenly set the car parking licence fee at $375 per car space per annum, instead of $375 per month for each space. Vantage noticed the mistake but didn’t draw attention to it.

A dispute arose as to whether or not the two companies were bound under this revised proposal.

The Court of Appeal held that Priolo and Vantage had intended to be bound as soon as they had agreed on the terms of the revised proposal.

Dealings and negotiations around commercial leasing have the potential to bind you. If the requirements of a valid contract are satisfied then the parties will be bound - even if formal documents have not been prepared or signed.

If you don’t want to be bound to a new Lease before formal documents are executed or you’re unsure of how to make this intention clear in your dealings, please contact: