Procedural History
– Trial court ruled in favor of Plaintiff.
- (D) Appealed on grounds that contract was too indefinite.
Facts
– Toys and Burlington entered into an agreement for five years. After four years, Toys was to notify if they wanted to extend there lease for an additional five years.
- Fixed minimum rental shall be re-negotiated to the prevailing rate of the mall.
- Feb. 1984, Toys notified Burlington with intention to re-new the lease. The prevailing rates were disagreed upon the two parties.
- Next ten months, both parties were going back and forth for renewal rates.
- Nov. 1984, Burlington listed location for rent. Toys left and sued Burlington for breach of contract.
– Defendant’s argument
- Failing to accept the prevailing rate stated in Feb and a second rent proposal made by Burlington in July, the renewal option had lapsed.
- Burlington appealed on the grounds that the contract was too indefinite.
- “agreement to agree” so not enforceable.
- Court stated- if this was correct, lease option would not be binding in the first place.
- “renegotiate”
- Showing intent to reach a future agreement – showing indefiniteness.
– Plaintiff
- The term “renegotiate” means the then existing prevailing rate would be determined by agreement, and not start over from a clean slate.
Issue
– Does the option agreement contain all material and essential terms to be incorporated in the subsequent document, to be enforceable?
Holding
– Yes.
Rule
– It is not necessary that an agreement contain all terms of a contract as long as it contains a practicable, objective method of determining the essential terms.
– Reasoning
– Burlington is the one that wrote the contract that is in question so it favors against there defense.
– Before voiding a contract for vagueness, indefiniteness or uncertainty of expression, court must attempt to construe the contract to avoid defect.
– Court ruled
- The fixed minimum rental shall be renegotiated to the then prevailing rate within the mall.
- Sets forth a definite and ascertainable method of determining the price term for lease extension.
Disposition
– Affirmed in favor of plaintiff.
- A valid option contract did exist.
Notes
- Toys v. Burlington, allowed to renew contract and Toys said they didn’t like new rate so B. rented to others saying it was too indefinite.
- Holding, Court thought it was important to give option agreement. “binding effect” because it had a formula and they had consideration (past paying) and intent to be bound, reliance….4 years into deal.
- Restatement 33, 2-305
- Holding, Court thought it was important to give option agreement. “binding effect” because it had a formula and they had consideration (past paying) and intent to be bound, reliance….4 years into deal.