Hole-in-One Ltd (HOL) has a contract for part of the construction of a railway extension project. It enters into a second contract with Big Toys Pty Ltd (Big Toys) to lease a large tunnel boring machine for a two-year term to work on the project. The contract includes an option to renew the lease of the boring machine for a further two years. The lease specifies the rental cost of the machine for the two-year period, but HOL and Big Toys cannot agree on what the rental cost will be in two years' time.

They include a term in the contract that the cost of renting the machine in the renewal period will be agreed between the parties at the time of renewal. The term also provides that, if the parties cannot agree, the cost is to be determined 'by a commercial valuer appointed by the President of the Master Builders' Association'. HOL decides to exercise its option to renew but Big Toys prefers to lease the machine to another firm.

Big Toys argues that the renewal term is void because the contract does not specify which commercial valuer will determine the rent, and because there is no guarantee the new rent will be acceptable to both the contracting parties HOL and Big Toys.

Advise HOL.