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Cantor v. Carter

A-1963-97T5 (N.J. Super. App. Div. 1999) (Unpublished)

LEASES; PAROL EVIDENCE—When a written lease that does not permit oral modification calls for payment of rent in the form of money, extrinsic evidence that the parties may have agreed to some form of barter will not be heard.

A travel agency entered into a three year lease with its landlord for space in a mall. The lease was renewed for an additional three year term. Toward the end of the second term, the tenant fell behind in its payment of rent, and ensuing litigation resulted in a consent judgment under which the tenant agreed to pay the back rent over time. However, the tenant breached the consent judgment and eventually vacated the premises owing several months of back rent. In the collection action that followed, the tenant counterclaimed, alleging the existence of an oral agreement made some time towards the end of the initial three year lease term, whereby the landlord promised to reduce or waive rent in exchange for travel perks. Even though the lease contained a provision waiving a jury trial for disputes arising under the lease, a jury found for the tenant. Even though the lease contained a provision prohibiting oral modification, the travel agency provided substantial evidence of its provision of perks in the form of first class airline upgrades, free limousine service and hotel and cruise discounts. The Appellate Division reversed the lower court and the jury verdict. In general, parol evidence is admissible where fraud in the inducement is asserted (although that exception is somewhat narrow) and also to assist the interpretation of “unspecific or vague” contract terms. Clear terms of a contract, however, generally do not require reference to extrinsic evidence for interpretation. Here, the lease clearly provided for rent in the form of money, not travel services. Consequently, the Appellate Division rejected the lower court’s rationale that the oral agreement was only offered to explain why the rent was paid in a form other than cash. Therefore, if the oral modification were admitted, it would have significantly changed the parties’ duties and obligations with regard to the rental provisions of the lease.

With respect to the jury waiver provision, the lower court viewed the issues involving the travel agency’s counterclaim as not arising out of the lease and thus not subject to the jury waiver. To the Appellate Division, however, the language of the lease was quite clear in that a jury trial was waived for “any litigation arising out of or in connection with the lease, whether it be an eviction proceeding or breach of contract proceeding.” The issues raised by the travel agency’s counterclaim clearly arose out of the lease, indeed, they went to the heart of the tenant’s rent obligations, the focal point of the litigation.

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