If the term “Gross Sales” had an intuitive meaning, we wouldn’t have had grist for today’s mill. And, thousands and thousands of us wouldn’t have the opportunity to write our own definition for that term. What a sad world that would make!
Percentage rent provisions are common and almost always rely on the starting concept of “gross rent.” But, while “gross rent” might have a generally understood meaning outside of the leasing community, that certainly isn’t the case inside the leasing community. If it had a common meaning, it would be an undefined term just as are most of the words and terms found in leases (and other agreements). Just think of this: we don’t define every word in our agreements (such as leases and mortgages); we rely on common understanding. That’s true even where words succumb to a choice of definitions. In those cases, many as they are, we understand those words and phrases in the context where found.
We’re not talking about “gross sales” as the number to which the “percentage” is applied because, at the end of the day, no one applies the “percentage” to “gross sales.” We apply it to an “adjusted” sales figure. Wherever we start as “gross,” you can be sure you’ll find a list of deductions or exclusions. These are two different “don’t count these” concepts, though, at the end of the day, their effect is the same. The “number” against which the “percentage” is applied is reduced by deductions and exclusions. [Read more…]