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Hancock Bank & Tr. Co. v. Shell Oil Co. - 365 Mass. 629, 309 N.E.2d 482 (1974)

Rule:

Once it appears that there was consideration to support a contract, and in the absence of statute, courts have traditionally declined to relieve a party from the terms of a contract merely because he made what he regards as a bad or uneven bargain.

Facts:

Defendant Shell Oil Company occupied premises under a written lease. The lease was for a term of 15 years, with options to extend the term. The lease could also be terminated by the oil company at any time with 90 days notice. The lease further provided for a fixed monthly rental, obligated the oil company to make certain minor repairs, and required the oil company to reimburse the lessor for any amount by which the general taxes on the premises exceeded $ 525.

Plaintiff Hancock Bank & Tr. Co. acquired the premises, subject to the lease agreement, at a public auction following foreclosure proceedings. The bank asserted that a lease for 15 years, with options in the lessee to extend the term for an additional 15 years, and permitted the lessee to terminate the lease on 90 days' notice, was "so lacking in mutuality as to be void as against public policy."

Issue:

Where an original lease was for a term of 15 years, had an option to extend the term for another 15 years, and permitted the lessee to terminate the lease on 90 days' notice, were the lease terms so lacking in mutuality as to be void against public policy?

Answer:

No.

Conclusion:

The Supreme Judicial Court of Massachusetts overruled the exceptions to the trial court's decision to grant summary judgment to defendant oil company. In its argument that the term of the lease was of uncertain duration, plaintiff bank cited no authority for the proposition that a lease, otherwise of definite duration, becomes a tenancy at will because prior to the commencement of that term the lessee (or lessor) may send a notice of termination which will not be effective until after the term of the lease has commenced. The Court explained that it had traditionally declined to relieve a party from the terms of a contract merely because he made what he regards as a bad or uneven bargain. There was also no basis for treating the lease as void on public policy grounds. Lastly, there was consideration to support the lessor's obligations under the lease.

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