TOYS, INC. V. F.M. BURLINGTON COMPANY
582 A.2d 123 (1990)
NATURE OF THE CASE: Burlington (D) appealed from a judgment which denied its motion for
summary judgment and granted Toys' (P) motion for summary judgment under Vt. R. Civ. P. 56
in P's breach of contract action.
FACTS:
P leased space in a shopping mall owned by D. The lease was for an initial five-year term. P
was given an option to renew for five additional years. The option provision provided that P
was not in default of the lease at any time during the initial term upon the same terms and
conditions except that the fixed minimum rental shall be renegotiated to the then prevailing
rate within the mall and P must give one year's written notice of intention to exercise the
option. P wrote to D to exercise the option before the one-year limitation. D confirmed that
P was exercising its option to renew and then stated the prevailing rate per square foot in
the mall. P then responded with a letter concerning a conversation with D's leasing agent
that involved a quotation of a prevailing rental rate well below that stated in D's
acknowledgement letter. P stated it was under the impression that P would be free to
renegotiate the issue of a fixed minimum rent without being bound to a prevailing rate. D
again replied with: You are of course completely free to renegotiate the rate without
reference to the prevailing rate. However, as far as the rights of the Tenant under the
option are concerned, the prevailing rate . . . is $10.00 [per square foot]. D also affirmed
that the prevailing rate is subject to change until such time as an agreement for renewal is
reached. The parties met and hashed out a new rate agreement. The first-year rent was lower
than the prevailing rate and the last-year rent was higher than the prevailing rate. D then
put the new terms in writing and gave P two weeks to accept them. The offer was valid
through August 1, 1984. P wanted more time and was given until August 15, 1984. On August
15, 1984, P wanted another two weeks. D did not respond. During this time, P was seeking an
alternative location for its toy store in case negotiations with D did not work out. P
wanted to purchase a location. Its loan application was submitted in October. A battle of
paper ensued with no negotiations. D claimed that P failed to accept the prevailing rate and
had let the July offer lapse. P claimed it exercised its option to renew and D was bound at
the prevailing rate. P acquired its building, left the mall and then sued D for breach. D
moved for summary judgment, arguing that the option provision in the lease is actually an
unenforceable agreement to agree, it was never effectively exercised by P and P waived its
rights through conduct. The trial court found that the lease provision created a binding
option, that P exercised the option by letter, and that P never waived its acceptance of the
renewal. P got summary judgment and D appealed.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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