Nature of the Case
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Facts
P leased space in a shopping mall owned by D. The lease was for an initial five-year term. P was given an option to renew for five additional years. The option provision provided that P was not in default of the lease at any time during the initial term upon the same terms and conditions except that the fixed minimum rental shall be renegotiated to the then prevailing rate within the mall and P must give one year's written notice of intention to exercise the option. P wrote to D to exercise the option before the one-year limitation. D confirmed that P was exercising its option to renew and then stated the prevailing rate per square foot in the mall. P then responded with a letter concerning a conversation with D's leasing agent that involved a quotation of a prevailing rental rate well below that stated in D's acknowledgment letter. P stated it was under the impression that P would be free to renegotiate the issue of a fixed minimum rent without being bound to a prevailing rate. D again replied with: You are of course completely free to renegotiate the rate without reference to the prevailing rate. However, as far as the rights of the Tenant under the option are concerned, the prevailing rate . . . is $10.00 [per square foot]. D also affirmed that the prevailing rate is subject to change until such time as an agreement for renewal is reached. The parties met and hashed out a new rate agreement. The first-year rent was lower than the prevailing rate and the last-year rent was higher than the prevailing rate. D then put the new terms in writing and gave P two weeks to accept them. The offer was valid through August 1, 1984. P wanted more time and was given until August 15, 1984. On August 15, 1984, P wanted another two weeks. D did not respond. During this time, P was seeking an alternative location for its toy store in case negotiations with D did not work out. P wanted to purchase a location. Its loan application was submitted in October. A battle of paper ensued with no negotiations. D claimed that P failed to accept the prevailing rate and had let the July offer lapse. P claimed it exercised its option to renew and D was bound at the prevailing rate. P acquired its building, left the mall and then sued D for breach. D moved for summary judgment, arguing that the option provision in the lease is actually an unenforceable agreement to agree, it was never effectively exercised by P and P waived its rights through conduct. The trial court found that the lease provision created a binding option, that P exercised the option by letter, and that P never waived its acceptance of the renewal. P got summary judgment and D appealed.
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