## Facts

- A shopping-center owner leased space to a national retail tenant under a detailed written lease drafted by the tenant.
- The lease set a substantial fixed minimum rent for the full term and provided for additional percentage rent only if annual gross sales exceeded a stated threshold.
- The landlord expected the tenant to function as an anchor that would attract customer traffic and generate percentage rent.
- The tenant’s sales never exceeded the threshold, so no percentage rent was ever owed or paid; the tenant paid the fixed minimum rent.
- The landlord sued to terminate the lease for failure of consideration, alleging breach of an implied covenant to operate diligently and continuously to generate percentage rent and benefit the shopping center.
- The trial court granted summary judgment for the tenant; the intermediate appellate court reversed; the state supreme court granted review.

## Issues

1. Whether a shopping-center lease with substantial fixed minimum rent supports an implied covenant requiring the tenant to operate diligently or continuously to generate percentage rent and customer traffic.
2. Whether the absence of percentage rent (because sales never met the threshold) constitutes a failure of consideration permitting lease termination.
3. Whether alleged pre-lease negotiations and “anchor tenant” expectations may be used to add such obligations to an integrated written lease.

## Decision

- The court vacated the intermediate appellate decision and reinstated summary judgment for the tenant.
- The court held that the tenant’s failure to generate percentage rent did not constitute a failure of consideration because the tenant paid the fixed minimum rent required by the lease.
- The court declined to imply a covenant of continuous or diligent operation designed to maximize percentage rent where the lease was detailed and provided substantial guaranteed rent.
- The court rejected reliance on extrinsic negotiations to impose duties not expressed in the integrated lease.

## Legal Principles

- Implied covenants in commercial leases are disfavored and are recognized only when necessary to effect the parties’ intent as shown by the written agreement.
- When a lease provides substantial fixed minimum rent and a contingent percentage-rent clause, percentage rent is treated as an additional benefit dependent on business success, not a guaranteed return.
- Disappointed expectations that a tenant will serve as an “anchor” or increase traffic do not create enforceable duties absent express lease language or a narrow basis for implication consistent with the contract.
- Where the tenant pays the required minimum rent, the non-occurrence of percentage rent does not, by itself, establish failure of consideration or justify lease termination.
- Summary judgment is proper when, as a matter of law, the lease does not contain and does not support implying the asserted operational duties.

## Conclusion

The court enforced the lease as written, holding that substantial fixed rent satisfied consideration and that the landlord could not terminate the lease by implying a continuous-operation obligation to produce percentage rent or shopping-center traffic where the integrated contract did not impose such duties.


Mercury Inv. Co. v. F.W. Woolworth Co., 706 P.2d 523 (Okla. 1985)