Contracts Case Brief # 9 * Classical Contract Law *

Title and Citation: Walker v. Keith, 382 S.W.2d 198 (1964)

Identities of Parties: P (Walker) signed a ten- year period lease with
D (Keith)
Procedural History: P sued D; the court at trial enforced the option,
and set the rent at $125 per month. D appealed to the Kentucky court
of appeals.
P filed suit for a declaratory judgment (to get amount of rent)
Went to equity court, with chancellor
Facts: P entered into a ten-year lease agreement with D, the lease
contained a provision for an option for renewing the lease at the end
of ten-year period. The provision included the same term for the lease
except the amount of rent was not specified, nor was a specific method
of calculating the rent; it said rent would be based on comparative
business conditions. P notified D of intent to renew the lease (through
proper notice of renewal) but the parties could not agree on the rent. P
sued.
Option Contract
o PR (Walker) ------------ PE
o Option to renewal leave for another 10 years
Rent is the consideration (dual duty) for the contract
o Paying for the option for the renewal, and paying to have
place
Issue(s): Was the provision in the lease for renewal an enforceable
contract without essential material clearly outlined (amount of rent)?
Was there a specific way to calculate the rent? Was there a
mechanism in place that could have allowed to calcite the lease
Holding and Rule: No, in ordered for a future-contract to be
enforceable and valid it must specify all material and essential terms
and leave nothing to be agreed upon as a result of future negotiations.
No way to calculate the rent
Courts Reasoning: The material terms of a contract must be
specified with certainty, including the terms of future agreements. If
the parties fail to agree on the material terms of the future agreements
or how the parties will negotiate the terms in the future, then the
contract fails for lack of certainty. Agreements to agree in the future
are not enforceable contracts. Rent is a material term to a contract.
Here, the parties failed to include an agreed upon rental amount in the

renewal provision of the contract. While the contract did contain

language about adjusting the new rent based upon comparative
business conditions, this language is not sufficiently definite because
it does not provide an exact method for calculating the rent. Therefore,
the renewal provision is fatally defective.

Classical Contract Law ------------- parties must agree on

all ESSENTIAL terms (etc. rent)

Judgment and Order: The decision of the chancellor is reversed.