Options require strict compliance

IN BRIEF - RETAIL LEASE CASE PROVIDES IMPORTANT LESSONS FOR LESSEES AND LESSORS IN REGARD TO OPTIONS

There have been many instances of court decisions on the nature of options and parties' obligations in regard to options. The most recent of these— Piazza Trevi v Cromwell BT Pty Ltd [2017] NSWSC 794—which involved an option for a lease of cafe premises is particularly interesting because the Supreme Court provided an in-depth assessment of what an option is and what is required to exercise an option.

OPTION IN RETAIL LEASE FOR CAFE SPECIFIES REQUIREMENTS FOR EXERCISING OPTION

The lease related to Foyer Cafe in Kent Street, Sydney.

The lessee had entered into a retail lease which contained an option requiring at least nine months' notice of exercise of the option.