Thursday, June 25, 2009


The parties signed an offer to lease which provided, inter alia, that they would sign a
formal lease within ten (10) days containing all of the clauses found in the offer.
Upon receipt of the accepted offer, the landlord entered into negotiations with the
existing tenants for the purpose of relocating them in order to accommodate the new
tenant. The landlord thereupon retained the services of a general contractor to proceed
urgently with the leasehold improvements to the premises.
The landlord submitted a draft lease which contained some clauses that did not appear in
the accepted offer, including:
• Movable hypothec;
• Non-publication of Lease;
• Prohibition by tenant to sell its business without the consent of the landlord;
• Requirement for a personal guarantee of the tenant’s alter ego.
Upon receipt of the draft lease, the tenant notified the landlord that because the draft lease
was not consistent with the written offer and because a proper lease had not been signed
within the stipulated ten (10) day delay, the tenant considered the offer to be null and
void for all legal purposes.
After receipt of the notice of cancellation, the landlord’s attorneys responded that to the
extent that any clauses in the draft lease were inconsistent with the accepted offer, the
landlord agreed to have them deleted. Nevertheless, the tenant maintained its position that
the offer was null and void.
The tenant argued that the acceptance of the offer did not result in a binding agreement
but merely a promise to enter into a contract subject to certain conditions. The Court did
not agree and condemned the tenant to pay damages.
The Court concluded that the offer contained all of the essential elements of a lease,
which required no formality to be legally binding. The leased premises were clearly
described as well as the intended use. The amount of the rent and additional rent was
specified. The occupation date and term of the lease were also clearly indicated. The
annex to the offer detailed the leasehold improvements that the landlord had undertaken
to complete.
Although the offer specified that a lease had to be signed within ten (10) days, it was not
automatically cancelled if the delay was not respected.
The Court also held that although the tenant’s unhappiness over the contents of the draft
lease was not unjustified, the latter had a legal obligation to notify the landlord of its
objections and reiterate its preparedness to sign a lease in conformity with the terms and
conditions of the accepted offer. Furthermore, there was nothing exceptional or abusive
about the objectionable clauses contained in the draft lease. The tenant, in acting as it did,
was in breach of the offer as well as its legal obligation to act in good faith.
The landlord satisfied its obligation to minimize its damages by finding a tenant for half
of the space in question. The tenant was ordered to pay the landlord, inter alia, the sum of
$33,000 for damages equivalent to the lost rent, and $1,000 for inconvenience and trouble
resulting from the default.

(2424-8643 Québec inc. c. Sam Lévy & Associés inc. 2008 QCCS 2789)

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