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Stop & Shop, Inc. v. Ganem - 347 Mass. 697, 200 N.E.2d 248 (1964)

Rule:

An omission to specify an agreement in a written lease is evidence that there was no such understanding. Justice, common sense and the probable intention of the parties are guides to construction of a written instrument. Since the governing principle is the justifiable assumption by one party of a certain intention on the part of the other, the undertaking of each promisor in a contract must include any promises which a reasonable person in the position of the promisee would be justified in understanding were included. 

Facts:

Appellant landlords challenged the decision by the superior court (Massachusetts) in favor of appellee tenant ruling that the parties' lease did not expressly or impliedly require appellee to use the demised premises for any particular purpose, keep the premises open, or engage in the supermarket business on those premises. Appellants argued that the lease included an implied covenant to continue the supermarket operations.

Issue:

Did landlords prove an implied covenant that required its tenant to continue to operate a supermarket on the demised premises?

Answer:

No

Conclusion:

The court held that the parties' lease, whereby appellee tenant promised to pay a fixed annual rent together with a further rent of 1.25 percent of all gross sales above a set amount, did not impliedly incorporate a covenant that appellee would continue to operate a supermarket business on the leased premises. There was nothing in the record which implied a covenant to operate the supermarket business beyond that time when--based upon the business judgment of appellee--the business should cease. Appellants did not demonstrate that a reasonable person in their position could be justified in understanding that an implied covenant was intended by the parties to the lease. In addition, the court held that the terms of the lease did not prevent appellee from opening competing stores adjacent to or near the demised premises. Accordingly, the trial court's decision was affirmed.

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