To Arbitrate Or Not To Arbitrate, That Is The Question.

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To arbitrate or not to arbitrate, that is the question. That has become a pretty hackneyed way of putting an issue in play. Here’s another hackneyed way of expressing something: “We’re not going to touch that third rail.” Roughly translated that means that Ruminations, in its old age [approaching 200 blog postings] is getting too wise to take a firm stand and offer anything other than an equivocal answer to that question, a lawyer’s answer so to speak – “It depends.”

Before anyone switches off to watch Pawn Stars or something else, let us explain. To us, it depends on what the subject matter of a dispute might be. An easy example is that only a court can issue a warrant of possession that a governmental official will enforce. So, we’re thinking that’s not a good “subject” for arbitration.

On the other side of the equation, except with respect to a few substantive areas where a subset of “special subject matter” judges has been selected, the rest are expected to be able to parse their way through the substance of any kind of dispute. So, when it comes to highly technical matters, such as construction issues, using a subject-matter expert arbitrator would seem to be the way to go. That is, it would be if both sides of the dispute are ready to accept some form of “objective” truth. By the way, the court process (and, by extension, the arbitration process) is thought of as a “truth-seeking” process. [Read more…]

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Why Some Negotiations Feel Like Going To The Dentist (With Apologies To All Dentists)

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Long-time readers may have discerned a certain pattern to the subjects Ruminations Ruminates about week after week. We try to mix up legal, factual, and procedural (negotiation) topics. Whereas we often do multi-part blog postings on legal and factual topics, in our library of 196 prior postings, we’ve not reached into the “procedural” shoebox for a “two-parter.” We’ve always thought that would seem like a rant disguised as a mere screed. Today, we deliver the other shoe to last week’s thoughts.

Last week we raised the issue of why some negotiators are quite parsimonious when mouthing the word, “Yes.” You’ll want to see that posting if you missed it. That’s easily done by clicking: HERE. Today, we continue by looking at some corollaries.

We posited that the word, “Yes,” is often withheld because of inexperience combined with a fear of disapprobation from the “boss,” whether that is the one that signs the paycheck or the one that signs the fee check. Unfortunately, even when a “Yes” is tendered it turns out to be a “No.” How often does one party, usually the one that didn’t draft the document, explain why something is important and hear from the other side: “OK,” and then when the redrafted document arrived, it sure doesn’t look “OK.” To minimize the variables in what follows, we’ll paint the picture with a little more detail. [Read more…]

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Yes-O-Phobia, A Barrier To Quickly Negotiating Agreements

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Yes-o-phobia: The fear of saying yes, often in the course of negotiating agreements. Usage example: “No.”

This phobia is more prevalent among those new to their field or job, but not exclusively to lesser experienced negotiators. It is also much more common among lower level staff than it is among principals or senior management. That’s because fear on the part of the phobicis not so much fear of giving up complete control over whatever may possibly happen in the future as it is a fear of being criticized by a superior. In law firms, “senior” partners, almost always, are willing to say “Yes” whereas newly minted attorneys and newly minted partners are commonly reticent. [Read more…]

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When Parties Disagree As To What Words Mean, Here’s What Courts Do (Part 2)

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Last week, we began to describe what tools or methods a court uses to decide what an agreement says if the parties disagree as to the meaning of a certain word or set of words. Our goal was to explain to laypeople how this task is approached. Today, in what should be a shorter posting, we’ll finish what we started. Click HERE if you want to start at the beginning of this topic.

To recap, the overall goal is to determine what the parties intended at the time of signing. An overriding principal is that parties don’t agree to terms that contradict one another. So, a court (or other decider) is supposed to consider the entire agreement (and contemporaneous, related agreements) when reconstructing what the parties meant when they used a given word or set of words. That makes “context” important. Disputants, when digging in their respective heels, often ignore “context” and convince themselves that they can edit out or ignore things they don’t like when those “things” conflict with their own “certainty” as to what certain words mean. That’s a big mistake. [Read more…]

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I’m Sure That The Word Meant What I Said It Meant, So Why Did I Lose The Case?

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Ruminations doesn’t think it’s going out on a limb by writing that we’re all guilty of succumbing to “Confirmation Bias” illness. We’d express that as: “We all interpret things in a way that supports our pre-conceived notions.” Psychologists would express it more artfully.

From time to time, but far less often than one might suppose, an argument will arise over “What does that contract provision mean?” Yes, believe it or not, active minds (and, in our experience, more often, inactive minds) will differ as to what a lease or other agreement provision really says or, more accurately, was meant to say. Even perfectly written text can be read to say something other than what was intended, and that’s what Confirmation Bias is all about. People see only what you want to see, and even the College of Cardinals won’t convince them otherwise. [Read more…]

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Landlord To Tenant: “I Love You, Don’t Ever Change”; Tenant To Landlord: “I Love You, Don’t Ever Change”

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Shopping center landlords want to preserve flexibility and their tenants want to protect what they “bought” when signing their leases. Ruminations believes both positions deserve respect.

If a tenant wants to be the master of its own destiny it shouldn’t be a tenant where others live. It should either buy its own homestead or do the equivalent of a sale-leaseback where it can generally write its own lease. If, on the other hand, a tenant wants the benefit of a “community” it has to yield some autonomy. Someone has to manage the community, and that manager inevitably is a “landlord.”

On the other hand (“he wore a glove,” but that’s the punchline to a clean joke not worth telling today) landlords demanding total management control need to be benevolent dictators, and in the long run, there are no such persons. Sometimes, a benevolent dictator needs to subordinate her or his own interests to those of his or her “subjects.” [Read more…]

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If You Are Going To Do Percentage Rent, Do It Right (The Rest Of The Story)

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Last week, we wrote about 65% of what we wanted to say about percentage rent. Today, we’ll write the other 65%. Jumping right in:

Let’s say a party goods store expects to, and actually does, have sales of nine million dollars in its first twelve months of business. The tenant knows that because it is moving from the same size space across the street. If sales were spread evenly over the year it would amount to $750,000 a month or $2.25MM a calendar quarter. Now, Halloween is the big, big one for a party goods store. The year-end holidays are pretty big too. In fact, one can expect that instead of the final quarter of the year accounting for 25% of the year’s sales, it will account for 45%. Let’s call that $4,050,000 or $1,350,000 each month. Yes, October will be bigger than either November or December; November will be smaller than December. [Read more…]

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What’s The Percentage In Paying Percentage Rent?

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First, we’ll define “heresy”: dissension, dissent, nonconformity, heterodoxy, unorthodoxy, apostasy, blasphemy, freethinking – opinions profoundly at odds with what is generally accepted. Now, we’re going to write a few things about “percentage rent,” beginning with a heretical view, “Why should a tenant pay percentage rent in the first place?”

Mind you, we’re not talking about a deal where the entire rent is a function of a tenant’s sales; we’re talking about the usual situation where the tenant has to pay rent even if it sells nothing. [We know of a mail order merchant maven who regales everyone with a story about the biggest flop item he ever handled. The story he tells is that he sold three units and got six returns.] Why should a landlord be a partner on the upside, but not on the downside? Ruminations has written about the concept that, in exchange for money paid as rent to a landlord, the tenant gets exclusive possession of the premises until an agreed-upon date. It’s like buying the premises with the obligation to re-convey it on that date. Further, think about a fairly common lease provision: “landlord and tenant are not partners, joint venturers, etc.” [Read more…]

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