Legal Question in Business Law in California

Agreement of mututal consideration between parties working together
What is the wording, the ''name,'' for mutual consideration between people ''serving each other'' in a business arrangement? We rent space in a craft barn for a unique product, and there is not enough business for two of the same craft. Although unwritten, we always thought it was
''understood'' that no one else would be brought in. We have rules to keep, one is not doing business in any other barns in the area. We think they should have the same consideration for us, and for 15 years it has been so. Our product is unique and wins a following, so we are of benefit to the ranch. Although there is not enough business for two to operate profitably, a new manager has brought in an identical craft. It seems silly to have two where neither can operate profitably, but when we protested, he got beligerant about it. We want to write a letter asking for a fair shake, but we need help with the words.
Would appreciate any help!

Asked on 12/11/02, 7:20 pm

2 Answers from Attorneys

Bryan Whipple Bryan R. R. Whipple, Attorney at Law

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Re: Agreement of mututal consideration between parties working together

First, the term 'consideration' in the law of contracts refers to what is given by a party to a contract in exchange for the promises of the other. For example, X agrees to paint Y's house within two weeks for $1,000 to be paid upon completion. X's promised performance (painting) is the consideration he gives, while Y's promise to pay is his consideration.

'Consideration' is thus not a synonym for 'respect' or 'due regard,' as it might be in ordinary conversation.

I assume you meant the ordinary meaning, and not the technical contract-law meaning.

What you seem to be describing might be an 'implied covenant' of the agreement under which you are a tenant in the craft barn. In addition to the terms and covenants in a lease or other contract, there usually are implied terms or covenants that would be given weight in court even though not written into the contract. For example, noted judges have stated that in every contract there is an implied covenant of good faith and fair dealing.

Whether a covenant not to lease to closely competing businesses can be implied in a commercial lease (such as you seem to have) is a tough question to answer without seeing the writing itself and knowing the facts and circumstances. Many commercial leases have such clauses written in, and the failure to include such a clause could be construed as intentional, so perhaps no covenant not to lease to competitors of existing tenants could be inferred. The theory would be that if the parties had intended such a restriction, they would have expressed it in the lease.

Again, the result in court cannot be predicted without more information. Sorry that your new manager is a bozo.

Answered on 12/11/02, 8:21 pm

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