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Landlord and Tenant - Elements of a Lease. 6844987 Canada Inc. v. The United People of Canada/Les Peuple Unis du Canada
In 6844987 Canada Inc. v. The United People of Canada/Les Peuple Unis du Canada (Sup Ct, 2022) the court set out the basics of a commercial lease, this one embodied in an Agreement of Purchase and Sale:(1) What are the terms of the parties’ lease?
[39] Under Ontario law, a commercial lease can be either oral or written. If it is in writing, it does not have to be in any particular form. For example, a valid lease can be formed by an exchange of letters setting out proposed terms of a lease, and a responding letter accepting those terms: In Re Pattenick and Adams Furniture Co. Ltd., 1970 CanLII 446 (ONSC), at p. 8. To enter into a lease, however, the parties must agree at a minimum on:. Who the landlord and tenant are;
. What property is being leased;
. When the lease is to begin;
. The term of the lease;
. The rent to be paid; and
. “all the material terms of the contract not being matters incident to the relationship of landlord and tenant, including any covenants or conditions, exceptions or reservations”: In Re Patennick, at p. 8, citing Williams’ The Canadian Law of Landlord and Tenant. [40] The applicants contend that the essential terms of the parties’ lease are set out in the Agreement. TUPOC contends that the lease was an oral agreement negotiated by Mr. McDonald and Mr. Komer that “evolved over time”.
[41] Schedule A to the Agreement contains all essential terms of a lease. It was signed by the applicants, both individually and on behalf of the numbered company, and by Mr. Komer, on behalf of TUPOC. TUPOC does not actually argue that the Agreement is missing any essential terms. It instead contends that these terms are not binding, because the Agreement says that the applicants “shall prepare the lease”, and the applicants never provided a draft lease to TUPOC.
[42] The prospective language in the Agreement does not mean that the parties had not already agreed to a lease. The commitment to lease is stated in the present tense, that is, “the Seller agrees to rent the current unleased space to the Buyer … commencing on the date this Offer is executed … with the first payment [of monthly rent] due prior to occupancy by the Buyer”. As already mentioned, a lease does not have to be in any particular form.
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