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A Landlord and Tenant negotiated a lease agreement of a store premise in a commercial property. The agreement underwent several iterations with massive changes in between each iteration. These earlier drafts of the lease agreement no longer exist.

Prior to signing the final draft of the lease agreement, the Tenant specifically asked the Landlord representative who would be responsible for the removal of fixtures attached to the premise (e.g. wall shelves, etc.). The Landlord representative said that the Tenant would not be responsible for those. This was witnessed by the Tenant's real estate agent.

The lease has now expired. As it turns out, buried deep in the lease agreement, is a clause that specifically states that the Tenant is responsible for the removal of those fixtures (even if the Tenant was not the one who installed those fixtures). The Tenant and the Tenant's real estate agent do not recall this clause in the earlier drafts of the lease agreement. Nonetheless, the Tenant did sign the agreement not knowing that the clause obligating the Tenant to remove the fixtures existed.

Generally speaking, without factoring the country of jurisdiction, what legal arguments does the Tenant have? Assume that both verbal and written agreements are equally enforceable.

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In general, the express terms of the lease signed supersede all prior negotiations of the parties, except to the extent that the particular language in question in the lease is ambiguous. This is called the parol evidence rule (which is the law in all U.S. jurisdictions although it has been expressly rejected in Israel).

The parol evidence rule expressly makes a written agreement supersede a verbal agreement, rather than making them equally valid. Also, even if both agreements had been written, generally speaking, the last and final version of the agreement will supersede earlier versions of the agreement.

The best defense would be along the lines of fraud-in-factum or fraudulent inducement, i.e. that this term was slipped into the final draft in a manner expressly intended to mislead the signing party about what was being signed.

I've won one case where this happened (where there was extensive email correspondence between business lawyers regarding the changes that would be made in each draft and there the version signed did not correspond to the last version signed electronically in a very long document on paper and there were other indicia of fraud), but by far the more common outcome is to bind the party signing the document (especially in a commercial context) and to consider failing to carefully read all terms of the final draft to be negligent on the part of the party signing the contract.

Arguably, there might also be a malpractice claim against the lawyer for the tenant for missing this change in a material term before the contract was signed.

  • Very insightful. Still digesting this and wondering if any is applicable. Thanks. – LegalNewbie Jul 24 '17 at 3:25
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None

If the tenant signed it then, at law, they agree to be bound by it. Verbal (or even other written) evidence that contradicts the written contract is irrelevant.

The only exceptions are if the tenant can prove fraudulent misstatement on the landlord's part. A conversation, even one witnessed by a quasi-independent third party is not going to prove that.

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