In a recent Queensland Court of Appeal decision, the tenant had purported to exercise its option out of time.
The Court upheld the primary judge’s finding that:
- the purported exercise of an option out of time constituted an offer by the tenant to enter a new lease on the same terms as the option; and
- the Court can look to the conduct of the parties after the formation of the alleged contract to determine whether a contract has been formed.
While the law applied by the Court is settled and not controversial, the decision serves as a reminder to landlords and tenants to properly document the creation or otherwise of a lease or agreement to lease to avoid uncertainty and protracted litigation, particularly after the exercise of an option.
