Toys, Inc. v. F.M. Burlington Company

Procedural History

–          Trial court ruled in favor of Plaintiff.

  • (D) Appealed on grounds that contract was too indefinite.


–          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.


–          Does the option agreement contain all material and essential terms to be incorporated in the subsequent document, to be enforceable?


–          Yes.


–          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.


–          Affirmed in favor of plaintiff.

  • A valid option contract did exist.


  • 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

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