Opinion ID: 1284132
Heading Depth: 1
Heading Rank: 2

Heading: the pertinent lease provisions

Text: Mercury contends the face of the lease demonstrates that Woolworth was intended to be an anchor tenant of the shopping center and its function was to generate traffic, to attract patronage to the shopping center for the mutual benefit of all retail tenants and, as a consequence, to generate substantial and adequate percentage rentals, all as anticipated by the parties to the lease. This is gleaned in part, Mercury asserts, from a common merchandising plan, as shown by the lease terms that provide for a common parking area and contemplate the presence of three other principal tenants  i.e., a supermarket, a drug store and a clothing store. If the three tenants were not in operation by a certain date, Woolworth could exercise its option of terminating the lease or of having its rent abated until the other tenants were doing business in their respective locations. The lease also contained a restrictive covenant in favor of Woolworth which prohibited occupancy of the shopping center by another variety or junior department store. According to the Court of Appeals, the physical relationship of the tenants and the interdependent nature of the leasing plan demonstrate that the parties contemplated Woolworth would operate in such a manner as to satisfy its obvious function in the shopping center. Woolworth, on the other hand, contends that the terms of the lease agreement are clear and explicit as to its obligations. The contract, Woolworth argues, required it to pay a minimum base rental, with additional percentage rentals due only if sales reached a certain volume. Furthermore, Woolworth asserts that the lease agreement expressly excluded any warranty by Woolworth with respect to the volume of sales it would generate upon the premises. [2] This, along with the other provisions, [3] Woolworth argues, negates any obligation on its part to operate its business under some amorphous standard of commercial prudence. Additionally, Woolworth contends that the parties specifically contemplated that Woolworth was not to be compelled to operate its business at all, but could vacate the premises, cease its operations and simply continue paying the stated rental for the remainder of the term. [4]