Contract Law and Tort Law (Breach of Contract and Negligence)

Facts: Beacon Fun Stuff Pty Ltd owns 50 acres of land at 10 Maze Crescent in Latrobe, Tasmania. When they purchased this property, they had intended to construct an amusement park, but the council zoning would not allow this. Despite this they purchased the land in 2019 for $250 000 and spent $250 000 erecting a building.

On 14 May 2020 Altair and Algol, directors of Beacon Fun Stuff Pty Ltd are approached by Wayne Moon. Wayne wishes to purchase 10 Maze Crescent from Beacon Fun Stuff Pty Ltd. Altair and Algol had not considered selling any part of their land before. Wayne however offers to purchase the property for $750 000 which is a good price. Altair and Algol are prepared to sell if they can find another suitable premise to operate their businesses from. Wayne shows them another property at 5 Elk Street in Latrobe and he tells Altair and Algol he owns it and he would agree to them signing a lease to rent the property for the next ten years. This new property is suitable and since they wish to sell Beacon Fun Stuff Pty Ltd in ten years, Algol and Altair sign to sell their property to Wayne for $750 000. They do not put in a term in the sale agreement that the sale is conditional on themrenting the property at 5 Elk Street. Settlement is due to take place on the 8 June 2020.

On 1 June 2020 Altair and Algol attempt to book time to take measurements at 5 Elk Street. At this time Altair and Algol discover that the property at 5 Elk Street is not owned by Wayne but by a business associate of Wayne's. This business associate has recently had a disagreement with Wayne over another business venture. He tells Altair and Algol that he will not rent the property to them.

Wayne is now threatening to sue Algol and Altair for breach of contract. Wayne says that they must move out of their property and because that sale was not made subject to the lease of 5 Elk Street, he will sue them for breach unless they complete the sale. Algol and Altair believe that the legal principles of either collateral contract, or fraudulent misrepresentation might assist them to combat Wayne's attempt to have them sued for breach of contract.

Required: Using the legal principles in relation to terms in a contract, collateral contracts, discharge of contracts and fraudulent misrepresentation (as you feel appropriate), please provide advice to Beacon Fun Stuff Pty Ltd.

Please refer to legal cases and legal principles as applicable.