Discount Groceries (DG) is a national chain of retail supermarkets. It is involved in strong competition with Fresh Food (FF), also a national chain of supermarkets.

Shop Properties (SP) builds and manages major retail shopping complexes throughout Australia, and SP is currently completing a major shopping complex in the western suburbs of Sydney.

DG and SP have negotiated about DG leasing a large retail space in the complex for a supermarket. In August, the sales manager for SP and the new stores manager for DG set out key issues, such as rent and floor space, in a terms sheet. They agreed that the lawyers will draft an appropriate lease agreement using the agreed figures from the terms sheet, and each party will then review the lease terms to see if it agrees the lease terms prior to signing the lease.

As soon as the terms sheet was finalized, DG purchased fridges and freezers for the supermarket costing approximately $500,000 in anticipation of the lease being signed.

In September, FF approaches SP and the parties discuss FF taking the shop that DG wanted to lease. FF offers SP a higher rental and SP decides to lease the premises to FF. SP writes to DG and advises DG that it will not proceed with the lease.

Advise DG whether it will be able to establish the doctrine of promissory estoppel.