Collateral contract not a disposition of an interest in land

  • Author : Robert Hay QC - 05-03-2012

The collateral contracts alleged were oral. Crown alleged that the tenants could not succeed because there was nothing in writing signed by Crown as required by the Statute of Frauds (ie s.126 of the Instruments Act 1958). VCAT held that the oral contracts did not relate to a  disposition of an interest in land because all they required Crown to do was send a notice that it would renew the lease.

The collateral contracts were effectively an option exercisable by the tenant: that is an offer to grant a further term which Crown was contractually precluded from withdrawing while the option remained exercisable; there was no disposition of an interest in land until the tenant exercised the option; if the tenant did not exercise the option there was no disposition of an interest in land. See: BS Stillwell & Co v Budget Rent a Car System [1990] VR 589 at 594. The cases contain an interesting discussion about the circumstances in which a collateral contract can be effective.

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Robert Hay QC

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