In the Spotlight: Agreement to Agree, Enforceable?

In Windsor, the potential landlord, Windsor, and the potential tenant, Clearcomm, executed a letter of intent specifying the terms of a commercial lease agreement. The letter of intent required Clearcomm to post a nonrefundable deposit of $5,000 at the time of execution of the letter of intent. The letter of intent also required Clearcomm to post an additional nonrefundable deposit of $10,000 to be paid upon the execution of the lease. Windsor was to apply $8,000 of the foregoing deposits to rent and the remaining $7,000 was to be held as the security deposit under the lease. The letter of intent contained a rent schedule and an option for Clearcomm to rent additional space in the building.

A couple of weeks after the letter of intent was executed, Windsor sent a fax to Clearcomm inquiring “what individuals will sign personally on this lease agreement.” Clearcomm responded via fax stating that it was an S-corporation and identified the individuals that would be signing on behalf of Clearcomm. The fax also stated that no personal guarantees would be given. Shortly thereafter Windsor forwarded the lease, containing personal guarantees, to Clearcomm. Upon receipt of the lease, Clearcomm sent the additional $10,000 deposit. More than 2 months later, Windsor realized Clearcomm never returned executed copies of the lease. Shortly thereafter, Clearcomm sent a letter to Windsor stating that it was not going to execute the lease and sought the return of the entire deposit. Clearcomm sent another letter approximately 2 months later stating that it found another location and would not enter a lease with personal guarantees.