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Toys, Inc. v. F.M. Burlington Company Case Brief

Summary of Toys, Inc. v. F.M. Burlington Company

Facts: Toys (P), a retailer store, made a 5 year lease K with Burlington (D), mall owner.  K stated that P can renew the lease after 5 years if gives notice one year before the lease expires.  Also, K stated that the fixed minimum rental for the renewal period will be renegotiated to the then prevailing rate within the mall.  Before the lease expired, P sent in writing that it wanted to renew the lease.  D sent back the prevailing rate and dispute as to the rent price arose.  Burlington put the store place for rent and P moved out and brought this lawsuit.

Procedure: Trial ct. issued summary judgment for P ruling that the lease had created a binding option.

Issue: Was the renewal option in the K definite enough to make it a valid option K?

Holding: Yes

Rationale: D argues that the work “renegotiate” shows that the option term was indefinite and no set standard were established.  But it is not necessary that the option agreement contain all the terms of the K as long as it contains a practicable, objective method of determining the essential terms.  In the current case, the renewal rates were to be determined by the prevailing rate within the mall and this gave the agreement the definiteness that is needed for an option K.  This clause of the K sets forth a reasonable and objective test to determine the price of the renewal K.  So the option K is not indefinite and thus enforceable.

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