Cengage Advantage Books: Law for Business 19th Edition by John Ashcroft,Katherine Ashcroft,Martha Patterson

Exercise 7

Restorations Inc. and Cantarella Realty entered into a five-year lease for commercial property owned by Cantarella. The lease included a flat monthly rental for the first three years, with increases in the fourth and fifth years. It also granted Restorations an option to extend the lease up to five years on written notice two months prior to the expiration of the original term. Restorations occupied the property six and one-half years, paying the original rental price each month without the scheduled increases or formally extending the lease. At the beginning of the sixth year, Cantarella made a demand for the rent differential for lease years four and five and for market rental value during Restorations' holdover period. Restorations admitted that it had become a tenant at sufferance on the expiration of the original lease, but claimed that the payment and Cantarella's acceptance of continued rent payments created a tenancy at will for the original monthly rental price. Cantarella claimed that neither party was aware of the rent increases, and that both sides had mistakenly believed that they were proceeding in accordance with the lease terms. Does this mistake prevent Cantarella from collecting the increased rent?