Assignments

Contract interpretation deals with the communications of the parties; the record can present hurdles that must be teased out, and, overcome.  I often start with this question to clients: “what did you understand the agreement to be when it was made?” 

The case of Johnson v. Yousoofian, 930 P.2d 921, 84 Wn.App. 755 (Wash.App. Div. 1 1996), was a commercial landlord tenant dispute where the tenant sought an assignment under the following lease clause: “Lessee shall not ... assign this lease or any part thereof without the written consent of the Lessor, or Lessor's agents. In the event of any assignment so consented to, a minimum charge of 10% of one month's rent shall be made by M.P. YOUSOOFIAN for their [sic ] services in transferring or assigning this lease, and shall be paid by Lessee. This lease shall not be assignable by operation of law.”[i]

As the clause reads, there is no mention of reasonableness in this lease.  The tenant in Yousoofian argued that there is an implied covenant of good faith in all contracts and that that implied covenant should effectively insert the provision that “landlord shall not unreasonably withhold consent to an assignment” into this particular lease.  The Court in Yousoofianheld quite simply that “a lease's unqualified requirement of the landlord's consent to the tenant's assignment imposes no duty on the landlord to be reasonable in refusing consent.”[ii]  Presumably, if there is that magic word, reasonableness, then, the withholding must be reasonable, as was analyzed in Ernst.[iii]  In Yousoofian, a commercial lease case, there was no reasonableness clause and the Court declined to superimpose one. 

[i] Id., at 757. 

[ii] Id., quoting Alwen v. Tramontin, 131 Wash. 78, 228 P. 851, 40 A.L.R. 551 (1924). 

[iii] Ernst Home Center, Inc. v. Sato, 80 Wn.App. 473 (1996) (dealing with enforceability of a stock clause stating that the “landlord may not unreasonably withhold consent.”).