Rights, Powers, And Forgiveness – Let’s Loosen Up

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Today, we’re going to engage in some pure Ruminating. Most of the time, we (and others who are deeply engaged in this side of the “business”) focus on the “documents.” We think about how they are drafted and often mis-drafted. We read articles and (in “olden” times”) participate in programs focused on how better to do our “job.” But, there are some “rules” that get short shrift. These are rules that regularly have more force than do laws.

One is that there is a difference between having the “right” to do something that is required (or to abstain from doing something) and the “power” to do that thing (or not). Another comes in two versions: It’s easier to ask forgiveness than to get permission; and it’s easier to apologize than to get permission.

The success of either approach might be related to another aphorism: Might makes right. Each reveals two deficiencies found even in the best-crafted agreements. There aren’t enough trees in the world (proverbially speaking) to create enough paper to contain all of the words needed to regulate every possible permutation of conducts or situations. And, much of what we write (and agree-upon) just plain isn’t important; the provisions aren’t really needed.

Take the common shopping center lease provisions barring a tenant’s use of an adjacent sidewalk as a sales area or barring a landlord from allowing the use of the parking area for “events.” These provisions never say, “[u]nless it makes good sense to do so.” Yet, today’s pandemic has driven tenant’s businesses to sidewalks and landlords are devoting portions of sidewalks and other common areas for tenant use – all without the world coming to an end.

Why is this the case? We suggest it is because, in each case, the parties have the power to do so. Obviously, tenants and landlords can waive provisions in a lease. In the example we’ve posited, it probably makes sense for a landlord to allow a “haircut” tenant to use a piece of the common area for an outdoor “cutting” tent. The tenant stays in business, and its landlord gets its rent. It also makes sense for most of a center’s other tenants. Those coming for a haircut constitute foot traffic and the common areas are (otherwise) underutilized. But, not every tenant would agree, and some of those dissenters might have a lease provision saying that the common areas (or even a “protected area” within the common areas) are off-limit for such uses. The landlord has no right to let another tenant use the sidewalk or the parking lot, but it has the power to do so.

What can such an aggrieved tenant do? Absent a specific right to withhold or reduce rent, something rarely found in leases for such a violation – not much. At the end of the day, an aggrieved tenant can sue. Then, at the end of one of the longest days that can be imagined, it will be asked to “prove” how much money was lost because one hundred square feet of the parking lot, perhaps ten spots, was misappropriated. Or, asked to “prove” how much business was lost because a portion of the sidewalk was blocked by a take-out counter or tables. Assuming that the aggrieved tenant’s sales had fallen, how will it show that the misuse of common areas caused the decline? Perhaps its sales were actually higher than its pandemic-suppressed sales would have been. As to immediate relief, will an aggrieved tenant be able to prove “irreparable harm,” a necessary requirement to get injunctive relief? Almost always – no. Here, the landlord has the “power, though not the right,” to breach its promise that the common areas will be not be used by other tenants for selling merchandise.

And, what can a landlord really do if its largest tenant uses the parking lot for merchandise pick-up by customers when governmental regulations limit the use of the store’s interior or when public perception (“fear”) keeps customers on the “outside”? An aggrieved landlord will face the same challenge as would the hypothetical aggrieved tenant above. On top of that, would a landlord evict its largest tenant? Even a threat of eviction has the lasting impact of destroying a relationship. Here, the tenant has the “power, though not the right” to breach its lease.

In what Dictionary.org calls a proverb, it explains that “it’s better to ask forgiveness than permission” means “[i]t is better to act decisively and apologize for it later than to seek approval to act and risk delay, objections, etc.” Basically, relying on this proverb as if it was a law or a provision in a lease or other agreement is a “cure” or mini-Force Majeure clause. It counteracts a previous agreement that just doesn’t seem to “work” in the eyes of the breaching party. Interestingly (to Ruminations) there is rarely any harm when a party proceeds to do what it feels it needs to do and then apologizes later. Think about that.

So, why does this work? Isn’t it true that “the law is the law is the law”? Well, there are two kinds of people.* There are those who are pragmatic, asking themselves: “What would I have done (agreed-to) had I known what the future held?” And, there are those who are so vested in the “principle” of “the law is the law” that changed or unforeseen circumstances are irrelevant. Our experience is that people who have a “stake in the game” are almost always pragmatic, whereas those who view their role in our industry as a technocrat tend to demand adherence to what they have crafted.

We don’t know exactly what our point is today. But, we know it begins with recognizing that we have to step back and pay more attention to reality and less to the hypothetical scenarios we try to address when crafting documents.

[* “Two kinds of people” – those who divide everything into two categories, and those who don’t.]

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Comments

  1. Alan Betus says

    This is more than ruminating. This is happening now. Every day. I know of several landlords and tenants entering into agreements that grant tenants the right to use outdoor common area space for curbside pickup. In the Agreements is a provision which essentially reads – If a third party with a right to do so objects to the Landlord granting use of common area space to others, Landlord and Tenant will work together to ensure that Landlord is not in default of its other agreement(s), even if it means Tenant has to cease using the parts of the common areas in question.

    It would not surprise me one bit that internally when deciding whether or not proceed with the deal, the phrase “better to ask for forgiveness…” from third parties with consent rights was used by the Landlords in deciding whether or not to move forward with the deal. And, I suspect that reasoning was also why the agreements did not contain the standard Landlord warranty about third party consents not being required or if required not obtained.

  2. Good rumination, but I want to see the case where the offended tenant is willing to go to court. If they are, it will undoubtedly be a red herring for what they really want (likely to get out of their own lease).
    For landlord off the top of my head I’d argue that Force Majeure (act of God, epidemic, government, etc) excused the landlord for allowing those common area uses. While Force Majeure may normally be fairly strictly construed, my guess is that most courts and good public policy would accept the landlord’s allowance as the greater good for all tenants, landlords and lenders, and a justifiable invocation of Force Majeure in circumstances never contemplated when negotiating the lease and for which no other legal solution doesn’t destroy more business and hurt more landlords and tenants. For evidence you can cite cities all over that are allowing restaurants to exclusively occupy public sidewalks, parking spaces and even streets – in order to mitigate the harm – believing those private uses of public property to be more beneficial to the public (mostly indirectly) than the public uses of them.

    • The is no Doctrine of Force Majeure at common law. So, lease-parties will need to rely on what the lease says. At common law, there are the defenses of impossibility, impracticality, and frustration of purpose. If any reader knows “better” or differently, please chime in.

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