This action seeks specific performance of an alleged commercial lease. Defendant denies the existence of the lease and moves to have the complaint dismissed. R. 4:46-2. The agreement relied on to sustain plaintiff's claim is in writing and signed by the parties, but it is silent with respect to the duration of the tenancy. On the other hand, it is alleged that there was a contemporaneous oral agreement that the lease would run for five years. The primary question thus raised by this motion is whether the agreement, as written, is enforceable within the requirements of the statute of frauds, N.J.S.A. 25:1-1 et seq.; and if not, may the missing term be supplied by parol evidence? For the reasons to be stated below, it is the opinion of the court that both questions must be answered in the negative.
The factual setting within which these issues are framed may be summarized as follows: Defendant is a subsidiary of Ramada Inns, Inc. and is the developer of a proposed hotel casino in Atlantic City known as the Tropicana. In October 1980, when the proposed casino was still under construction, representatives of defendant entered into negotiations with one Robert Mitchell, plaintiff's assignor, concerning a lease of commercial space within the hotel. A verbal agreement was reached and on October 23, 1980 a representative of defendant directed a letter to Mitchell entitled "Potential Lease of Retail Shop at the Proposed Tropicana Hotel/Casino." The letter recited the fact that, upon the receipt of a deposit of $2,000, defendant would hold open 1,900 square feet of space for a period of 60 days the space to be used as an ice cream parlor. Lessee was to make all necessary interior and exterior improvements, subject to the approval of the lessor "in its sole discretion." Sketches and lay-outs were to be submitted with 60 days. A rental figure of
$45 a square foot was stipulated and the terms of the agreement required the approval of the Casino Control Commission pursuant to N.J.A.C. 19:41-1.2. In the event that the schedules outlined were not met, defendant reserved the right to retain the deposit as liquidated damages and to terminate the agreement. There was no mention concerning the duration of the lease, although plaintiff claims that it was orally agreed that it was to be for five years with an option for an additional five-year period. There was also no provision regarding a commencement date.
The letter was signed by the parties and Mitchell made a deposit of $2,000. Requests were thereafter made to defendant to provide architectural drawings of the site. Plaintiff claims that these were needed by its own architect in order to prepare the plans and sketches required by the terms of the agreement. No plans were provided by defendant, however, and the time limits contained in the letter were never met. On January 21, 1981 defendant addressed a letter to Mitchell rescinding the agreement, "since none of the terms or conditions [had] . . . been met." On February 25, 1981, despite the attempted rescission, Mitchell purported to assign his rights in the alleged lease to plaintiff Alan J. Brechman. Defendant had no knowledge of the assignment and did not consent to it. On June 9, 1981 plaintiff instituted this suit seeking specific performance. Defendant attempted to return the deposit on June 25, 1981, but it was refused.
An assessment of the enforceability of the October 23, 1980 agreement requires the examination of a combination of legal and equitable principles. For example, since the complaint seeks specific performance, equity requires that the contract be clear, definite and precise before such relief may be granted. Dechtman v. Sidpaul , 178 N.J. Super. 444, 453 (App.Div.1981). There are, in addition, certain legal standards which must be met, the most significant of which appears to be the statute of frauds, N.J.S.A. 25:1-1 et seq.
Independent of the many rules of construction developed by common law, the Legislature of this State has established a class of contracts which may not be enforced absent certain specified requirements. Any parol lease of real estate which exceeds three years, for example, is unenforceable in law or equity and is treated as a tenancy at will. N.J.S.A. 25:1-1; Sayre v. Roseville Motor Co. , 85 N.J.L. 10 (Sup.Ct. 1913). In addition, N.J.S.A. 25:1-5(d) precludes the enforceability of contracts involving an "interest in or concerning" real estate unless the agreement is in writing and signed by the party to be charged, or some other person lawfully authorized by the party to be charged. This provision has been held to include leases of real estate exceeding three years. Colalillo v. Kaiser , 5 N.J.Misc. 595, 598 (Sup.Ct.1927); Cooper v. Aiello , 93 N.J.L. 336, 338 (Sup.Ct.1919). Given plaintiff's claim that the agreement here was for at least five years, the statute clearly applies. The initial question thus becomes whether the letter of October 23, 1980 meets the requirements of the statute.
It is the general rule in New Jersey that a writing, in order to comply with the statute of frauds,
See also Jacobson v. Lambert , 109 N.J. Eq. 88, 90 (E. & A.1931). Whether a particular agreement contains "all the essential terms of the bargain" is not always clear. 72 Am.Jur. 2d, Statute of Frauds , § 341 (1974). Most courts agree, however, that the essential terms include an adequate description of the property, a definite term (including the commencement date), the agreed rental and the manner of payment. Id. at 865; cf. Berg Agency v. Sleepworld-Willingboro, Inc. , 136 N.J. Super. 369, 376 (App.Div.1975).
In arguing for the unenforceability of the writing alleged to constitute a lease here, defendant ...