Enforcing an Offer to Lease – Essential Elements and No Fundamental Breach

In Northridge Property Management Inc. v. Champion Products Corp., 2017 ONCA 249, two issues relating to agreements to lease commercial premises were considered: (1) when there is a binding agreement to lease, as opposed to an unenforceable "agreement to agree"; and (2) when the threshold of a fundamental breach by the landlord is achieved. These issues come up from time to time in commercial leasing and this decision provides useful guidance.

Facts

The landlord, Northridge Property Management Inc. ("Northridge"), and the tenant, Champion Products Corp. ("Champion"), entered into an agreement to lease providing for the use of the premises for Champion's party supply business and sanitation supply business.  This appeared to be a fairly typical agreement to lease which included an agreement by the parties to execute the formal lease, based on the landlord's standard form of lease (which was attached as a schedule). The parties were obligated to act reasonably and