Reference no: EM131478780

1: Explain and apply the fundamental principles of Australian commercial law & corporations law which covers the areas of the Australian legal system, contract law, agency, law of tort and corporations law.

2: Analyse how Australian Commercial and Corporations Law has developed to resolve business challenges and identify limitations to its current scope.

3: Use research and analysis skills to critically evaluate the principles of Australian Commercial and Corporations Law.

Group Assignment Question

In 2010, the plaintiff, "Bertini Italian Restaurant" (hereafter Bertini) was in negotiations to enter into a long-term lease contract for restaurant space with Garland Properties Pty Ltd (hereafter Garland), owner of a large commercial property in Docklands,Melbourne. Bertini has been leasing this property on month-to-month basis and needed the assurance of a long term contract. To this effect, Bertini demanded a lease period of ten years, with an option to renew for additional five years at the end of the lease.

Bertini was not able to secure the ten year lease that he sought. During the negotiation it became clear that Garland was prepared to offer five years lease only. Bertini was also told to undertake significant refurbishment work to Garland's satisfaction at the beginning of the lease to ensure that the restaurant is brought up to the required standard in comparison to other restaurants in the commercial complex. Bertini was so anxious that his business would not be able to recoup these refurbishment expenses if he does not get assurance that the lease is for ten years. In fact, the refurbishment cost run to $2 million. However, Garland did not budge, but made statements to the effect that if Bertini signed the five-year lease contract and refurbished the restaurant to the desired level before the start of "Melbourne Expo", an important international event to be held in the city, he "will be looked after at renewal time." Garland representatives also mentioned that the reason they specified a five years lease term was to make the leases align with those of other tenants in the Complex.

The lease contract did not contain an option to renew. However, it contained the following clauses:

The Landlord must give notice to the Tenant, at least 6 months, but no more than 12 months before the expiry date of the first five year lease, indicating whether:
a) The Landlord will renew this lease and the terms of the new lease
b) The Landlord will allow the Tenant to occupy the premises on month-to-month contract basis; or
c) The Landlord will require the Tenant to vacate the premises upon the expiry of the lease

Six months before the expiry of the five year lease, Garland informed Bertini that the lease will not be renewed and he should vacate the premises. As a result, Bertini had to stop his business submitted to voluntary administration in a path to insolvency. Bertini would have made $200,000 in ordinary profits and $100,000 in exceptional profits due to some lucrative deals, if the lease was extended for additional five years.

This matter comes to your group for your legal opinion. Please do the following.

1. Advise Bertini by focusing in particular on issues of collateral contract, promissory estoppel, and and remedies.
2. Advise Garland by focusing in particular on issues of collateral contract, promissory estoppel and remedies.