Opinion ID: 2611465
Heading Depth: 1
Heading Rank: 4

Heading: Ratification by agreement

Text: Merrill argues that the original lease agreement was ratified by express agreement in addition to conduct. Specifically, he refers to the agreement that DeMott and Welty would receive two weeks free rent in exchange for, among other things, releasing Merrill from any liability relating to his ownership status at the time the original lease was executed. Respondents' release was provided in a letter from their attorney to Merrill's attorney, stating that Respondents release any claim arising out of or relating to the question of whether [Merrill] owned the property during any period of time in which the Master Lease was in effect. Respondents argue that this letter constitute[s] nothing more than further negotiations and serves to highlight the fact that everyone was limping along on a month-to-month tenancy. We conclude that Respondents' claims that the lease was void ab initio, and that the letter was a mere negotiation, are inconsistent with the language referring to any period of time in which the Master Lease was in effect. If the parties mutually believed that no contract had ever gone into effect and that all of their correspondence to date was purely negotiation, then the exchange of a two week rent credit for the foregoing liability release would have been pointless. Having determined that the rent credit for liability release exchange constituted a binding contract rather than a mere negotiation, the issue of whether the original lease was ratified by agreement turns on whether relinquishment of claims arising out of or relating to the question of whether [Merrill] owned the property effects a ratification. We conclude that the agreement did serve to ratify the original lease based on the apparent intent of the parties. While Merrill could possibly have anticipated consequential damage to Respondents as a result of permit issuance delays caused by Merrill's late acquisition of title, this seems unlikely. Respondents had already commenced renovation of the property without the permit, and did not otherwise delay their operations pending issuance of the permit. Accordingly, we conclude that the mutually understood purpose of Merrill's rent credit offer was to dispel any uncertainty about his ability to hold Respondents to the lease, and that the district court therefore erred in holding that the agreement did not effect a ratification of the original lease.