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In a commercial lease, the existence of a substantial minimum base rent, in addition to the provision for percentage rental payments, suggests the absence of an implied covenant of continuous operation. Also, in the context of a commercial lease, the lessee is under no obligation, in the absence of a specific provision therefor, to occupy or use, or continue to use, the leased premises, even though one of the parties, or both, expected and intended that they would be used for the particular purpose to which they seemed to be adapted or for which they seemed to be constructed.
In 1963, the parties, appellee Heard et al. and appellant Piggly Wiggly Southern Inc, executed a lease in which appellees' predecessor agreed to construct a supermarket for appellant according to plans prepared by appellant. The lease was drafted by appellant which began in 1964 for a term of 15 years. The lease was renewed on the same terms for an additional seven years with options to renew for two additional three-year terms. Appellant exercised both renewal options and, after it was acquired by a new corporation, one month into the second three-year term, appellant closed its store, vacated the premises, and moved its grocery store operation to a nearby shopping center belonging to its new owner. While appellant continued to pay the annual base rent to appellees, it refused to sublease the vacant store, despite the interest of other supermarkets in the abandoned space. Appellees filed suit seeking damages for appellant's alleged breach of the lease. The trial and appellate courts held that the lease contained an express continued use covenant and an implied covenant of continued operation. Appellant challenged the decision.
Did the lease contain an express continued use covenant as well as an implied covenant of continued operation?
The judgment holding that appellant’s lease with appellee contained an express continued use covenant as well as an implied covenant of continued operation was reversed because the court held that the language of the lease expressly negated a continuous operation requirement and contained no such implied covenant. The court found that the parties did not bargain for continuous operation and that it was not authorized to create such a provision.