The recent case of Hillam v JPSF Pty Ltd [2017] NSWSC 1510, considered whether a binding oral agreement existed between the parties in an agreement for a lease.

The Applicant in this case, Hillam, sought a declaration and order that a valid and binding lease existed by way of oral agreement with the respondent, and that the lease had been partly performed.

The court considered the fact that the only meeting between the applicant and respondent was when the applicant met with the LJ Hooker agent of JPSF on the premise. The agent made an offer for a new lease to the applicant, but the court found that this offer did not amount to an oral agreement because the agent had no legal authority to make any oral offer of lease to Mr Hillam. Nevertheless, a ‘Proposed Lease’ was received by the applicant. However, it was not executed until such time when the offer to lease had been withdrawn by the respondent.

The Court held that the parties had not intended to enter binding legal relations, whether oral or written, and as there was no execution of a formal lease document, there was no contract. The application was dismissed. This case demonstrates the importance of ensuring all elements of contract formation are satisfied to have a binding contract.

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