No Lease Existed Because Parties Didn't Agree on Rent Commencement Date

A retailer and a developer discussed the retailer's interest in leasing space in a mixed-use building located in a community the developer was developing. The retailer and developer signed a letter agreement that discussed the terms of a lease the parties expected to sign at some point. But no formal lease was ever signed by either party. Regardless, the retailer moved into the space. The retailer later sued the developer, claiming that it had relied on the developer's statements that the community would be developed more quickly and the building fully built to suit business owners. The developer responded that, under the lease, the retailer owed rent and other charges.

A Louisiana appeals court ruled that there was no lease because the parties didn't agree on the rent commencement date. The retailer believed that it was obligated to pay rent only when the entire building was completed, while the developer believed that the retailer was obligated to pay rent once its space was completed. The court rejected the developer's argument that the letter agreement was a lease. The court said that for the letter agreement to be a lease, the parties must agree on all the terms. Because the parties didn't agree on the rent commencement date, there was no lease and the retailer didn't owe any rent. But the developer could evict the retailer because it had no legal right to the space [Prejean v. River Ranch, LLC].