Apr 01, 1986

Lease, Agreement To – Void for Uncertainty #85


By Gerry Neely
B.A. LL.B.

Lance lay on the chesterfield, his headache just beginning to respond to his wife's soothing cool hand on his forehead. The cause of his headache - a three-day trial and a judgment that was a blow to Lance's pride. You see, Lance thought of himself as an expert in leasing property, a skill he had first learned from his father who was an old-timer in the real estate business.

Some of you may even remember his father, Charles, because in real estate mythology, he is believed to be the first real estate salesman to have had printed on his business card the slogan "Get a Lot While You're Young." That slogan proved that humour sells and Charles did so well with young newlyweds that he came to be known in the business as "old Chuckalot."

Inevitably, Lance, to his annoyance was nicknamed "Lancelot" by his father's friends. This changed only slightly for the better when Lance, whose successes in leasing he enjoyed retelling, came to be known to those of his friends who met daily at the round table for coffee, as "Sir Leasetenalot."

So much for the family history. Back to the trial at which Lance had been a witness in a case involving a landlord's action against a tenant who had reneged on an agreement to lease the landlord's property. As Lance advised his wife, he had hurriedly prepared the Offer to Lease on his usual Interim Lease Agreement form. When signed by the parties, this Agreement provided for a basic rent at so much per square foot "all triplenet dollars." It also gave the tenant an option to renew for five years "at negotiated rates" and "a right of first refusal to purchase." Finally, it required the tenant to prepare, at the tenant's expense, a lease "in the form attached and initialled by both parties." No form of lease was attached.

The defence of the tenant was that the agreement to lease was unenforceable because of the uncertainty of the terms of the proposed lease. As the judge said "the agreement sought to be specifically performed contained some unhappily worded expressions." The first expression to be examined was the reference to "all triplenet dollars." The landlord knew that meant the tenant was to pay all expenses. The tenant, however, thought that while the landlord was to receive the basic monthly rent net, the share of the taxes, insurance, maintenance and operating expenses to be paid by the tenant was still to be negotiated.

The second uncertainty was the lack of a lease containing the terms which the parties intended would govern their relationship. The judge could not say with certainty what the two parties had in mind.

It was this lack of an attached form of lease that defeated the landlord's claim for specific performance. This major uncertainty enabled the judge to avoid deciding whether the phrase "triplenet" or the other code phrases, also made the agreement uncertain.

As his wife, Myr-lynn, continued to work her magic on the vanishing headache, Lance finished his story.

The landlord was not entirely unsuccessful. The judge said that the tenant had a duty to prepare, execute and deliver a lease to the landlord. The tenant's failure to obtain a copy of the landlord's standard form of lease or to prepare its own lease entitled the landlord to retain the deposit of $10,425.00 as liquidated damages. Had the obligation to provide the lease been placed upon the landlord rather than the tenant, the tenant would have been entitled to the return of the deposit.

 1. The Royal Trust Corporation of Canada v. Island Savings Credit Union, S.C.B.C. No. C834584, Vancouver Registry.

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