## Facts

- In 1951, landlords Edgar C. Walker and others leased a small lot to Clarence M. Keith for 10 years at $100 per month.
- The lease included an option to extend for an additional 10 years on the same terms except rent.
- The renewal clause stated rent would be “agreed upon” using a “comparative basis of rental values” at renewal time, reflecting “comparative business conditions” between the two periods.
- Near expiration, Keith gave timely notice exercising the renewal option, but the parties could not agree on the new rent.
- Keith filed a declaratory judgment action seeking confirmation that the option was effective and requesting the court to determine the renewal rent.
- The trial court treated the option as enforceable and, following an advisory jury recommendation, set renewal rent at $125 per month.

## Issues

1. Whether a lease renewal option is enforceable when the renewal rent is left to future agreement and the clause provides no definite, objective method to determine rent.
2. Whether a court may set the renewal rent when the parties’ agreement does not supply an ascertainable standard for calculating it.

## Decision

- The Kentucky Court of Appeals reversed.
- The court held the renewal option unenforceable because the rent term was too indefinite and uncertain.
- The clause was an unenforceable “agreement to agree” on a material term.
- Because the lease did not provide a workable, objective method to determine rent, the court lacked authority to fix the rent for the renewal term.

## Legal Principles

- A contract must be sufficiently definite for a court to interpret and enforce its essential terms.
- Rent is an essential term of an ordinary lease; a renewal option must either state the rent or provide an ascertainable, objective standard for determining it.
- A renewal covenant that leaves rent to future agreement, without a definite method (e.g., formula, appraisal procedure, arbitration), is generally void for uncertainty.
- Courts may enforce an agreed mechanism for determining an open term, but may not create a contract by supplying a missing essential term where the parties provided no objective standard.

## Conclusion

The court invalidated the lease renewal option because it left renewal rent to later negotiation and relied on vague references to “comparative” values and business conditions, providing no objective standard for calculation; as a result, the tenant could not compel renewal, and the court could not set the rent.


Walker v. Keith, 382 S.W.2d 198 (Ky. Ct. App. 1964)