## Facts

- A retail tenant (Toys, Inc.) leased mall space from the landlord (F.M. Burlington Company) for April 1, 1980, through February 28, 1985.
- The lease granted a single five-year renewal option if the tenant was not in default, required one year’s written notice, and provided that the fixed minimum rent would be “renegotiated to the then prevailing rate within the mall.”
- On February 7, 1984, the tenant gave written notice stating it intended to exercise the renewal option.
- The landlord responded confirming the exercise and stating what it asserted was the prevailing per-square-foot rate in the mall.
- The tenant replied that its renewal notice had been based on a materially different understanding of the “prevailing rate,” and the parties attempted, unsuccessfully, to negotiate the rent for the renewal term.
- The landlord indicated it would list the space for another tenant; the tenant vacated, obtained other premises, and sued for breach of contract based on the landlord’s alleged duty to renew at the mall’s prevailing rate.

## Issues

1. Whether a lease renewal option requiring rent to be “renegotiated to the then prevailing rate within the mall” is enforceable or an indefinite agreement to agree.
2. Whether genuine issues of material fact existed as to whether the tenant accepted the option strictly according to its terms.
3. Whether genuine issues of material fact existed as to whether the tenant waived its renewal rights, precluding summary judgment on liability.

## Decision

- The Vermont Supreme Court held the renewal option enforceable because it provided a definite, ascertainable method for determining rent: the then prevailing rate within the mall.
- The Court reversed the trial court’s grant of summary judgment to the tenant on all liability issues.
- The Court affirmed summary judgment only on the limited point that a valid renewal option existed.
- The Court held that disputes in the parties’ correspondence and course of dealing created triable fact issues on acceptance and waiver; neither party was entitled to summary judgment on those issues.
- The case was remanded for trial on the remaining liability questions.

## Legal Principles

- Lease option clauses should be construed, if reasonably possible, to give them binding effect rather than render them void for indefiniteness.
- A price term referencing an objective external standard (such as a prevailing rate in a defined market) can be sufficiently definite to be enforceable, even if the contract contemplates later negotiation to implement that standard.
- An option must be accepted strictly according to its terms to create a binding extension; whether communications constitute unconditional acceptance may present a fact question.
- Waiver requires an intentional relinquishment of a known right; where intent must be inferred from ambiguous correspondence or conduct, waiver is generally for the factfinder.
- On competing summary judgment motions, each party receives the benefit of reasonable doubts and inferences when evaluating the opponent’s motion.

## Conclusion

The court enforced the lease renewal option because “prevailing rate within the mall” supplied an objective method to set rent, but it required a trial on whether the tenant strictly accepted the option and whether the tenant’s conduct amounted to waiver, making summary judgment on overall liability improper.


Toys, Inc. v. F.M. Burlington Co., 155 Vt. 44, 582 A.2d 123 (Vt. 1990)