Is There A Limit To Waiving A Non-Waiver Clause?

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When we first wrote about the loophole in non-waiver clauses that recognizes parties can orally agree to waive such clauses even one that explicitly say that there can be no oral waivers, we got some notes expressing incredulity. After the reality set in, the notes started asking whether there were any limits to this “loophole.” We at Ruminations didn’t know how to answer until we came across a May 12, 2017 decision from the Texas Supreme Court in a case where one of the parties has this name: Boo Nathanial Bradberry. The decision can be seen by clicking: HERE. It ruled there was a limit and its reasoning makes pretty good sense. [Read more…]

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Who’s On First? Keeping Track Of Basic Facts

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Please don’t ask for the central theme of today’s blog posting. We’ve done so already and came up empty-headed. The closest we’ve come is that we’re writing about how a stitch in time saves nine.

The genesis of today’s subject is a very simple case that reached a California appellate court. It probably isn’t worth looking at, but for those compelled to do so, the February 2, 2017 decision can be seen by clicking: HERE.] The court was confronted with a situation where, on its face, the signatory to an indemnification agreement was not authorized to sign the agreement on behalf of the indemnitor (the one who would have to pay). There was no indication that the document was signed with the intention of fooling anyone. It appears that the person signing the agreement was confused or ignorant as to “who” should have done the signing. We’ll explain.

There were two limited liability companies. One was the sole manager of the second. We’ll call the first company, the parent, and the second, the child. The parent had a managing member. He was the kind of person who breathes, unlike, say, Citizens United. He could sign on behalf of the parent, but when signing for the child, the “proper” signatory would be “by parent, as sole member of child, by breathing person, as managing member of parent.” Get it? If not, then realize that the “person” who could sign for the child was the parent. But, because the parent was an entity who could not hold a pen, a “real” person needs to sign on behalf of the parent. [Read more…]

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Out With The Old Perfectly Good Lease, In With …

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Well, another holiday weekend has rolled around. When that happens, we try to stay away from technical or detailed topics and just Ruminate about things that trouble us. We try to throw out some easily digestible thoughts and await the bounce-back. Today’s posting meets those criteria, but after hacking out today’s blog posting, we were haunted by two old quotations. Both are almost certainly wrongly attributed to Samuel Clemens a/k/a Mark Twain. But, that doesn’t make them any less disturbing.

The first is: “What gets us into trouble is not what we don’t know. It’s what we know for sure that just ain’t so.” The other is: “When I was a boy of fourteen, my father was so ignorant I could hardly stand to have the old man around. But when I got to be twenty-one, I was astonished at how much he had learned in seven years.”

Guilty on both counts.

Here’s the puzzle, one that wasn’t a puzzle when we were younger. Isn’t ignorance beautiful? Imagine this situation. There’s a shopping center lease executed in 1976, 40 years ago, and it has run out of extension options (then probably called “renewal” options). The lease has worked well. In fact, over the 40 years, no one ever dragged it out to look anything up other than to see what had to be done to exercise one of those extension options. [Read more…]

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Options: Two Wrong Ways To Write It Right

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Weekly, Ruminations looks for a topic. Now, two short of 250 blog postings [who’d a thunk?], finding unique ones is a challenge. Don’t worry, we’ve got a few lined up. But, today, we’re returning to a central theme: the failure to write what you mean. This isn’t theoretical. It that regard, we respectfully disagree with the late, great Judge Benjamin N. Cardozo, in particular when he wrote:

The law has outgrown its primitive stage of formalism when the precise word was the sovereign talisman, and every slip was fatal. It takes a broader view to-day. A promise may be lacking, and yet the whole writing may be “instinct with an obligation,” imperfectly expressed. If that is so, there is a contract. [Wood v. Lucy, Lady Duff-Gordon, 118 N.E. 214 (N.Y. 1917)]. [Read more…]

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Lease Term Extensions (Renewals) – You Snooze; You Lose

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We’ll begin with some controversial thoughts about a tenant’s right to renew its lease or, as we prefer, to extend the lease term. They are all grounded in the position that the right of a tenant to extend the term of its lease is not a gift from the landlord. It is bought and paid for, much as is any other right in the lease. It is part and parcel of the deal. “How much is the rent if I lease the space for five years and get the right to extend the lease term for another five years?”

We’ve tread on some of this ground before. To see what is in the Ruminations archives, click HERE and HERE.

Let’s make it clear, Ruminations is neither a poll follower nor a flip-flopper. We still abide by the principle that the terms of a lease (or any other agreement for that matter) are the result of negotiation and that the outcome of such negotiation is heavily influenced by the relative bargaining powers of the parties. But, we also think that the marketplace has norms or starting points and (also) if you don’t ask, you don’t get. [Why some attribute this axiom to Stevie Wonder, we don’t know. But, we didn’t ask, so we didn’t get.] [Read more…]

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Better Late Than Never, But Maybe Still Not Good Enough: Late Option Exercise Notices

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Despite rumor and gossip to the contrary, most late notices to elect one right or another will not be honored by the courts. To put this another way, notices such as those to extend a lease’s term will most often be subject to the “time being of the essence” rule, even if those words don’t appear in the document. Yes, there are cases to the contrary. Yes, some jurisdictions are more forgiving than others, but don’t count on it.

A lot of us think that courts will give life to late notices under the “so what’s the big deal, the recipient (usually a landlord) wasn’t prejudiced” rule. We don’t know how to say this more clearly, “don’t count on it.” If you send an unequivocal election notice, within the agreed-upon time limits, to the right places, by the agreed-upon method, you don’t “even have to get into it.” Why lose sleep at night? [Read more…]

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Exercising a Renewal Option or SNDA When In Default – Why Not?

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This will not be politically correct, and you can throw this back to me when you see me on the landlord’s side of a lease or the lender’s side of an SNDA. I’ll take that risk because I live by the overriding principle that everything is “bargaining power, everything is priced into the rent or into the deal.” Therefore, fairness is not the deciding factor. Ethical behavior, moral behavior, lawful behavior, politeness – yes, these are all overriding factors, but leases and SNDAs allocate “risk” between the parties, and the topic of this blog entry is a particular kind of risk.

Those caveats having been expressed, I going to pretend that I’ve been hired to fill the role of King Solomon, but there is no baby to be found. I’m being asked to decide what is right or wrong. I take comfort that if the parties to a lease or SNDA decide to do what I think is “wrong,” they’ve “priced” it into the lease or the loan. That’s a convoluted way of saying that parties can accept lease or loan or SNDA provisions that are “wrong” or “unfair” if the overall deal is advantageous. Ralph Waldo Emerson is said to have written: “For everything you have missed, you have gained something else, and for everything you gain, you lose something else.” [Read more…]

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