Tuesday, December 3, 2013

Walker v. Keith case brief

Walker v. Keith case brief summary
382 S.W.2d 198 (1964)


CASE SYNOPSIS
Appellant lessors challenged the decision of the lower court (Kentucky), which granted a declaratory judgment in favor of appellee lessee in his action that sought an adjudication that he had effectively exercised an option to extend a lease, and a further determination of the amount of rent to be paid upon the lease's renewal. The chancellor fixed a new rent amount because the parties had been unable to agree upon the rental amount.

ISSUE
The principal issue was whether the option provision in the lease fixed the rent with sufficient certainty to constitute an enforceable contract between the parties.

DISCUSSION

  • The court found that the basic principle of contract law that required substantial certainty as to the material terms upon which the minds of the parties had met was a sound one and was to be adhered to. 
  • A renewal option stood on the same footing as any other contract right. 
  • Rent was a material term of a lease. 
  • The court held that if the parties did not fix it with reasonable certainty, it was not the business of courts to do so. 
  • The renewal provision of the parties' contract was fatally defective in failing to specify either an agreed rental or an agreed method by which it could be fixed with certainty. 
  • Because of the lack of agreement, the lessee's option right was illusory, and the chancellor erred in undertaking to enforce it. 
  • If the parties had agreed upon a specific method of making the determination of the rent amount, such as by computation, the application of a formula, or the decision of an arbitrator, they could have been said to have agreed upon whatever rent figure emerged from utilization of the method.

CONCLUSION
The court reversed the chancellor's judgment that granted declaratory relief to the lessee.


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