The Reasonableness of a Reasonable Standard

In a commercial lease the tenant is always required to perform certain duties; to abide by certain restrictions; and usually, to obtain the Landlord’s consent for work that is done, etc.  Ideally we would always like these requirements to have defined standards, so we know exactly what is expected.  For example, most leases will restrict the tenant from being “too loud.”  This is a reasonable restriction, but who is the judge as to what is “too loud”?

Preferably, standards would be tied to “violation of any law”, or a similar objective way of measuring what would constitute a breach. Or, a neutral third-party is set as the determining party as to whether it is “too loud,” i.e., the government.

Often times, landlords want to retain flexibility to deal with tenants, and want to have some discretion.  In these instances, we always want the landlord to be required to exercise such discretion reasonably, with standards of reasonableness written in to the lease to protect tenants from, (i.e.) overly sensitive neighbors.

When a landlord insists on having terms be in their “sole discretion”, this is a red flag.  This means that the landlord could potentially act completely unreasonably, raising concern over the landlord’s motivation to hold a tenant in breach of the lease.

Having reasonableness throughout a commercial lease ensures that both sides will act reasonably towards each another. Often, this means waiving damages and allowing only equitable remedies, like a declaratory judgment of injunctive relief to resolve disputes.  Since most commercial leases are upwards of ten years, ensuring reasonableness will also help maintain a good business relationship.