| ICSC Legal Database - Cases | Monday, February 22, 1999 05:01 PM |
| Citation: |
| 166 Mamaroneck Avenue Corp. v. 151 East Post Road Corp., 78 N.Y.2d 88, 571 N.Y.S 2d 686, 575 N.E.2d |
| Issue: |
| Whether a lease renewal option, providing for arbitration if the parties cannot agree on rent for the renewal |
| period, is indefinite and therefore unenforceable? |
| Facts: |
| Plaintiff-tenant, exercising a lease renewal option provision, commenced a proceeding for the appointment of an |
| arbitrator to resolve a dispute as to the amount of rent to be paid. The landlord (defendant) cross-moved for |
| dismissal of the proceeding, alleging that the plaintiff failed to state a cause of action "in that the renewal |
| provision contained in the lease twas] an agreement to agree and [was] therefore void and unenforceable." The |
| lower court granted the landlord's cross motion to dismiss, finding that the renewal term was indefinite and |
| therefore unenforceable. Plaintiff appealed, and the Appellate Division reversed the lower court decision, thereby |
| granting the plaintiff's petition. Further review was sought. |
| Holding: |
| Affirmed. The option is not an invalid "agreement to agree" because the arbitration clause provides an objective |
| standard for determining the amount of rent. The decision to submit any dispute as to the amount of rent |
| payable during the renewal period to an arbitrator-a third party with considerable discretion, but whose discretion |
| is delineated by law-provides an objective standard that renders the renewal clause definite and enforceable. |
| Classification 1: |
| Landlord and Tenant |
| Classification 2: |
| Options/First Refusals |
| 00104 - Legal Update - Winter 1991 |
|
