Case Notes

The Jackson Redevelopment Authority (JRA) leased several parcels along Farish Street in Jackson, MS, to a predecessor lessee that failed to perform on the terms of the lease. JRA then permitted a new tenant, the Farish Street Group (FSG), to take over the long-term lease. The new parties then renegotiated the lease, which required FSG to renovate the properties in what was to be an "entertainment district" and lease them to retail tenants within a prescribed period of time. Several years passed, however, and the improvements promised were largely unfinished. In addition, none of the properties had yet been leased to retail tenants. JRA therefore terminated the lease, leading to a dispute between the parties in The Hinds County Chancery Court, where the lessees argued that they had invested substantial sums of money in an effort to perform as contracted and that JRA had given them assurances that the timelines in the lease were flexible. Chancery Court found that the lease was properly terminated. The lessees appealed.

The appellate court first noted that termination of a contract is an extreme remedy, permitted only for a material breach, and that it should be "sparsely granted." [citations omitted]. It explained further that a breach should only be considered "material" when "there 'is a failure to perform a substantial part of the contract or one or more of its essential terms or conditions, or if there is such a breach as substantially defeats its purpose,' Gulf South Capital Corp. v Brown, 183 So. 2D 802, 805 (Miss. 1966), or when 'the breach of the contract is such that upon a reasonable construction of the contract, it is shown that the parties considered the breach as vital to the existence of the contract,' Matheney v. McClain, 248 Miss. 842, 849, 161 So. 2D 516, 520 (1964). Thus, a tenant's perfect performance of the contract is not required for it to remain in possession, and trivial breaches must be tolerated by the lessor.