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St. Clair v. English

A-0273-05T1 (N.J. Super. App. Div. 2006) (Unpublished)

LEASES—It doesn’t matter if a condition precedent to the effectiveness of lease is not satisfied if the complaining party treats the lease as if it was in effect.

A landlord sued its tenant for unpaid rent and for unpaid bills. A jury ruled in favor of the landlord. The tenant appealed, raising a number of procedural and substantive arguments. One substantive argument was that “the lease was rendered void because there was no proof that [it, the tenant] had provided [the landlord] with the liability insurance [it was] obligated to obtain.” The Court rejected this argument because the tenant “treated the lease as if it was in effect and [it was therefore] estopped from claiming that it was not.” The tenant also argued that the landlord had agreed to “take the steps necessary to qualify the tenant to operate the bar-restaurant during the term of the lease by failing to transfer ownership of the liquor license.” The Court rejected this argument on two grounds. The first was that the claim that a lease violates public policy is an affirmative defense and should have been raised below. Therefore, it was waived. The second reason the Court rejected this argument was because “a party’s conduct can estop him or her from relying on an affirmative defense. ... Since the [tenant] used the liquor license to [its] profit and treated the lease as valid, [it could not] assert this defense… .”

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