What Can Humpty Dumpty Recover If His Wall Wasn’t Finished On Time?

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Today, we return to the topic of “damages.” Our context will be “waiving” them. That way, we won’t feel as if we are duplicating postings of long ago such as the ones you can review by clicking: HERE or HERE or HERE.

The core “damages” one can expect to collect are designed to give the injured party “the benefit of its bargain.” That’s not the same as being made “whole.” Those core damages, ones that probably should never be “waived” are designed to give a party the money necessary to get what it “bought” in the first place. So, if the buyer was promised a car with a spare tire and the trunk turned out to be empty, the measure of its damages would be the cost of a spare tire. If a tenant was supposed to get trash removal “included” and the full container is surrounded by overflowing trash bags, the tenant is entitled to enough money to get the trash hauled away. If a builder contracted to put up a building and didn’t finish it, the customer would be entitled to the quantum of money that would pay to finish the building.

But, what about the cost of going out to buy that tire? What about the lost business from customers who ran from the store because of the “stink”? What about the cost to rent alternate space because the building was not completed by the contracted-for time? [Read more…]

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Whose Deal Is It Anyway?

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Two stubborn mature men arguing with each other isolated on white background

Rules are made to be broken even if no one knows there was even a rule. In this case, it is Ruminations violating its own rule against two consecutive screech-blog postings. Over the last 300+ postings, we’ve “salted” Ruminations with observations about our own bad habits and those we’ve seen in our generally great real estate community. We’ve tried to space them about a month apart. Last week, we wrote about an all too common way that a minority, but a disturbing minority, of our colleagues try to put the “other” negotiator down. This week we address another one of our “bugs.” That’s a rule-breaker.

To make matters worse for us, we are breaking another one of our rules – the one that has kept us from singling out one subset of our community – this week, the lawyer subset (of which this writer is a very proud member). Our distress isn’t limited to this subset. Certainly we of that persuasion hold no monopoly on the tendency to be complained-about today. Yet, we in that profession certainly suffer more frequently from this affliction than do members of any other subset of the real estate community.

Alright already, what is it? It is thinking that we are the business people who are actually making the deal – forgetting that it is our client’s (or principal’s) deal. How do we do this? We do it by arguing pure business terms as if the money to be paid or received will be coming out of our own pockets. [Read more…]

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Just Because The Agreement Allows It Doesn’t Mean It Is Allowed

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First, Ruminations is not expanding its coverage to all that would be considered “contract law.” It’s just that leases, mortgages, and all of the other documents we encounter on a daily basis are just a subset  of the broader category of contracts, ones dealing with real property. Second, although we mostly write about memorializing agreements, from time to time we bring up the topic of how people act once their agreements are executed. Today is such a day.

So, today, Ruminations will be focusing on some post-contract behavior we read about in a January 20, 2017 decision from the Supreme Court of Delaware. For readers who don’t already know this, here’s a valuable piece of information. The Delaware Supreme Court is held in extremely high regard by courts of other states – it is “persuasive.” And, when it overrules the very highly regarded Court of Chancery of the State of Delaware, ears should perk up. [Read more…]

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For Want Of A Parenthesis A King’s Ransom Could Have Been Lost

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What is every document writer’s nightmare (or at least one of their nightmares)? How about a mere “typo”? “Typo,” short for “typographical error,” is (as all readers already know), “an error (as of spelling) in typed or typeset material.” Count both the “open” and “close” parentheses in the following recital from a 17-1/2 million dollar loan guaranty:

WHEREAS, NNN Cypresswood Drive, LLC, NNN Cypresswood Drive 1, LLC, NNN Cypresswood Drive 3, LLC, NNN Cypresswood Drive 4, LLC, NNN Cypresswood Drive 5, LLC, NNN Cypresswood Drive 6, LLC, NNN Cypresswood Drive 7, LLC, NNN Cypresswood Drive 9, LLC, NNN Cypresswood Drive 10, LLC, NNN Cypresswood Drive 11, LLC, NNN Cypresswood Drive 12, LLC, NNN Cypresswood Drive 13, LLC, NNN Cypresswood Drive 14, LLC, NNN Cypresswood Drive 17, LLC, NNN Cypresswood Drive 18, LLC, NNN Cypresswood Drive 19, LLC, and NNN Cypresswood Drive 20, LLC, each a Delaware limited liability company (as defined in the Security Instrument), the “Borrower”), have obtained a loan (the “Loan”) in the principal amount of Seventeen Million Five Hundred Thousand and No/100 Dollars ($17,500,000.00) from ….

The counts don’t match. Most likely you think there is a missing parentheses. Why aren’t you thinking that there is an extra one? [Read more…]

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Once Upon A Time The Parties Agreed To Execute This Agreement

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Once again, we’ve been pondering the utility of using recitals for agreements, for example, within a lease amendment. There seems to be three perspectives: that of the author, that of the counter-author, and that of someone who comes across the document later, often years and years later.

One of the recurrent Ruminations’ themes is explaining that words matter and we all have an obligation to choose the right ones. By “the right ones,” we mean the ones that express the intent of the contracting parties. The commercial world works on the assumption that the parties to an agreement share the same intent and will honor that intent. To that end, when an author uses a recitals section to explain the purpose of an agreement, the counter-author (that being the person on the other side of the deal) gets a first look at what the author thinks is the deal. Just as the first chapter of a (non-fiction) book is almost always an introduction to the book itself, the recitals can serve a similar purpose. [Read more…]

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Curiosity Doesn’t Really Kill Cats; It Makes Them Better Cats: A Lesson For All Of Us

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Today’s thoughts are universal – they can apply to every endeavor we undertake. That’s no reason to pass over them and move on to highly real estate industry-focused ones. Sometimes, we need to look at the forest.

A few weeks ago, we were privileged to be able to hear Elizabeth Blackburn speak. [Use your favorite search engine for the answer.] She was asked what it was that got her to be who she turned out to be. Her answer – “curiosity.” She believed that her most important distinguishing feature was that one trait. Of course there were others, but her curiosity was the one from which all of the others could be derived.

Everything we see, everything we hear, everything we read: these are all learning opportunities. Often, we can learn more from failures and errors than from successes. Yet, in our experience, we are more comfortable relying on our successes than on the errors we and others make. What a difference it would make if we were more curious about why we think, what we think, and why others think what they think. [Read more…]

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Parallel Construction, Consequential Damages, And Use Of A Dictionary

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Questions about damages and remedies are not simple to answer and, often, the answers are less than fully satisfying. The overriding framework is that business people don’t really focus on these “leave it to the lawyers” issues until a problem rears its head. Unlike many lease and other agreement issues that are worked out between cooperating parties, when one starts to look at a document or at the law to see “what are my rights, what can I do, how can I be made whole,” the relationship has already broken down. That’s when each side starts counting commas and looking for all of the “notwithstandings.”

Today, we’re going to look at an actual case, one decided at the end of October by a California appellate court. It can be seen by clicking HERE.

It involves the concept of “consequential damages, “exclusive remedies,” and “rent and other charges.” And, as will come as no surprise to regular readers, it teaches us something about using the right words. Oh, yes, it also describes a very familiar process, that process being where lawyers are hired to try to find a way to argue that the words in a lease or other agreement support a conclusion contrary what any objective observer would see as the plain intention of the parties. In the course of that process, the dispute we’ll be describing became the subject of four, count them, four separate appellate proceedings. [Read more…]

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Ruminations Goes Bowling – Scores A 300!

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300 is a pretty good score for a single bowling game. It is a score of perfection. While the same can’t be said about reaching our 300th Ruminations blog posting today, perfection not even being on our wish list, we’re pretty pleased at having reached this benchmark. Some call it ranting; we call it Ruminating, and that’s what we’ve done weekly 300 times. Why?

We love doing it because of our readers, over 2500 each week. We love doing it because of our subscribers, about 1300 of you. We love doing it because of the discussions it generates by way of comments directly to this blog site, on LinkedIn, and by various side channels. We who facilitate real estate deals, and that’s almost every one of you, are a community. We don’t need to see each other eye-to-eye, though (admittedly) we’re always thrilled to meet a reader in person, in order to know one another. We all care enough about doing better work today than we did yesterday, to share our ideas. Lurker or active correspondent – it doesn’t matter, we are all Ruminators – we all think and care about what we are doing, about what we sign our names to. [Read more…]

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