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The Importance of Clarity and Lack of Ambiguity in the Exculpatory Clause of Your Florida Commercial Lease Agreement

gearsIn any commercial contract, there are several things you are going to want to be sure the document has. However, in addition to having each of the “nuts” and “bolts” that are necessary to accomplish your objectives, all of the contract’s pieces need to mesh together into one cohesive, clear, and unambiguous agreement. If the document lacks clarity and unambiguity, this may lead to problems for you later, including in circumstances in which you need to litigate a dispute over the agreement, as one commercial landlord found in its recent Florida court case. To protect your interests, make sure you are working with an experienced and knowledgeable Florida landlord-tenant attorney when it comes to the preparation of your lease agreement.

The recent case was a dispute between a Miami-Dade landlord and its commercial tenant. The tenant was a seller of watches, jewelry. and other valuables. The landlord provided a master safe for storage of the tenant’s valuable items. The lease contract stated that the landlord assumed no legal responsibility for losses due to burglary, fire, or the vault doors failing to close properly. At some point, the tenant suffered a loss and sued the landlord for that loss. According to the tenant’s lawsuit, the landlord allowed an unauthorized person to access the master safe, and that unauthorized person removed $2 million worth of the tenant’s items.

The landlord took the logical step of asking the trial judge to throw out the case. The landlord’s argument was that the exculpatory clause in the lease agreement clearly covered the scenario that triggered the tenant’s loss, which meant that the landlord had no liability, and the tenant had no case. The trial judge agreed and ordered the matter dismissed.

The tenant, though, was able to revive its case through the appeals process. The key to the tenant’s successful appeal was the same thing that was the key to the lower court’s ruling:  the exculpatory clause in the lease agreement.

While the trial judge concluded that the clause was applicable and prevented the tenant from suing, the appeals court determined that the clause was not enforceable. The reason it was not enforceable was because it was insufficiently clear, unambiguous, and unequivocal to meet Florida law’s standards for enforceability.

The landlord started at a disadvantage. Florida law disfavors exculpatory clauses, so, in order for the exculpatory clause in your commercial lease agreement to be enforceable, it has to be very clear and in no way ambiguous. The law says that the wording must be “so clear and understandable that an ordinary and knowledgeable person will know what he or she is contracting away.”

The exculpatory clause in this case failed to meet that standard because it had two provisions in it that were at odds with each other, thereby creating ambiguity. On the one hand, the agreement stated that the landlord “shall not be liable for any loss or damage to the contents of the vault … caused by burglary, fire, or any cause whatsoever, but that the entire risk of such loss or damage is assumed by the lessee.” On the other hand, the document later said that the landlord was responsible for “the exercise of ordinary care to prevent the opening of said vault or boxes contained therein by any person other than lessee or the authorized agent of the lessee.” These two clauses were unavoidably in conflict with each other and could not be reconciled. That made the entire exculpatory clause ambiguous and unenforceable.

Creating a commercial lease agreement that will sufficiently accomplish your objectives and also protect you in the event of a dispute can be a difficult process that requires precise drafting. For skillful representation to meet all of your commercial lease dispute needs, talk to the experienced South Florida commercial landlord-tenant attorneys at Stok Folk + Kon. Our attorneys have been providing useful litigation strategies to protect our clients’ interests for many years.

Contact us online or by calling (305) 935-4440 to schedule your consultation and find out how this firm can help you protect your interests.

More blog posts:

Supermarket Chain Wins Appeal in its Federal Lawsuit Seeking to Enforce Exclusivity Restrictions in its Leases, Florida Business Lawyers Blog, May 17, 2018

Department Store Overcomes Landlord’s Attempt to Block Sublease of South Florida Mall Space, Florida Business Lawyers Blog, Oct. 27, 2017

Photo Credit: geralt, [CC0 License], via Pixabay