Five-Year Farm Lease Not Transformed Into Annual Lease Due to Lease Language Saying That Rent Amount Would Be Reviewed Annually.

The landlord entered into identical leases with different tenants for separate farms in the spring of 2011.  The leases specified that, "The term of this lease shall be five (5) years.  An annual review of rental rates and terms will be completed in January of each year.  The final year of this contract shall be 2015."  The leases set for the initial rent that was to be paid, but one of the tenants did not agree to the rental rate for 2013 that the landlord desired.  Thus, they paid the same rent as they had for 2012 and continued to farm the land.  The landlord sued, claiming that the tenants failed to negotiate in good faith the terms for 2013 and that the leases were invalid.  The trial court disagreed.  On appeal, the court affirmed, holding that the rental amount, as expressly specified in cash, was an essential contract term and, as such, the agreement to agree on it in the future was not enforceable.  The court determined that the lease language was clear in that the rental rate were to be reviewed annually.  The lease said nothing about coming to an agreement on rental rates.  Thus, the lease was for a 5-year term rather than being an annual lease, and the rental rate initially specified applied for the entire term unless the parties agreed otherwise.  The court also upheld the trial court's application of the parol evidence rule to exclude extrinsic evidence.  Gibbons Ranches, L.L.C. v. Bailey, et al., 289 Neb. 949 (2015).

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