Exclusive Use Restrictions: Some Will Rob You With A Fountain Pen

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It seems fitting that for the 200th Ruminations blog posting we would return to a recurring theme: “Words matter,” and do so in the context of a very recent court decision interpreting a lease’s exclusive use restriction. If you want to read the December 16 North Carolina Court of Appeal’s opinion in Charlotte Pavilion Road Retail Investment v. North Carolina CVS Pharmacy, click HERE. If you don’t, here’s a short synopsis.

The tenant lost because the restriction wasn’t written in a way so as to protect the tenant against what it could have foreseen. The tenant’s negotiators in the North Carolina lease should have read the Texas case that their litigators found when the North Carolina lease dispute went to court. That way, even if they didn’t intuitively understand the deficiency in their “formula” exclusive use language, they might have gotten a clue as to what they should have written. [Read more…]

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A Different Take On Whether Consent To An Assignment Or Subletting Can Be Unreasonably Withheld

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What happens if a lease states merely that a tenant may not assign it or sublet the leased premises? What happens if it says the tenant may do so, but only with the landlord’s consent? A majority of jurisdictions (states), perhaps even a substantial majority, do not require a landlord to be reasonable. Even though there is such a “majority rule,” negotiators need to adapt to the minority view if the leased space is in such a jurisdiction. More importantly, the winds of “do I have to be reasonable” law are shifting. That’s because, little by little, the implied covenant of good faith and fair dealing is encroaching on the grounds where “sole discretion” used to reign. So, in jurisdictions that have required that a party act in “good faith,” even where a landlord has reserved the right to deny its consent for any reason or for no reason at all, it will not be permitted to deny its consent if doing so will defeat its tenant’s reasonably expected benefit of the bargain. Basically, the covenant, as is increasingly being interpreted, prevents a party from using a given contract right as a sword when it was intended to be a shield.

Even if at the time a lease is signed the law in a given place is pretty clear that, absent a lease saying that a landlord has to be reasonable, it can act arbitrarily, that law can change during the lease’s term. Therefore, it makes good sense, in every lease, to define the “rules” for giving or withholding consent even where you think the law is settled. [Read more…]

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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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