Business Finance Homework Help

Read chapters 9,14,16 from this book

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Question:A very reputable law firm specializing in trusts and estates enters
into a written lease for 15,000 square feet of space in an office
building pursuant to a five year lease. The clients who visit this law
firm are generally wealthy individuals who are seeking advice about
managing their wealth, preparing their wills and creating trusts for
their beneficiaries. The law firm occupies most of the second floor of
the building, and another tenant occupies the remaining 4,000 sf on that
floor. The lease does not contain a right of first refusal for the
contiguous space, and it is silent about possible expansion space.
About one year into the lease, the managing partner of the law firm told
the building owner’s representative on site that the firm was growing
and would be interested in leasing the other 4,000 sf on that floor when
the current tenant’s lease expired. The building owner’s
representative responded, “No problem; we will be glad to do that.” This
was not memorialized in any written document, particularly a written
amendment to the law firm’s lease. The other tenant left when the law
firm had three years remaining on its lease. The building owner told the
managing partner of the law firm that the space had already been leased
for the next ten years for use as a methadone clinic, and that there
was a written lease between the building owner and the operator of the
methadone clinic that could not be broken. The partners of the law firm
and their staff were upset because they had not been told in advance
that the tenant was vacating the premises and given an opportunity to
lease that space, and even more upset because their clients would not
want to visit their offices when they would have to share the building
lobby, the elevators and the second floor hall with the clientele of the
methadone clinic down the hall.

1. Does the law firm have a valid claim for breach of contract
against the building owner for failing to provide an opportunity to
lease the 4,000 sf of space before leasing it to the methadone clinic?
Please explain your answer.

2. Was there a misrepresentation by the building owner’s
representative when he said, “No problem, we will be glad to do that?”
such that the law firm can recover damages? Please explain your answer.

3. Three years into the five year lease term (i.e., two years
remained on the original five year term), the law firm vacated the
premises without notice because of a conclusion that the close proximity
of the methadone clinic was driving away some of the law firm’s
clients. The building owner sued the law firm for breach of contract.
What damages can the building owner seek from the law firm?

4. How does the concept of mitigation of damages come into play with
respect to the building owner’s conduct after the law firm vacated the
premises? Does this provide any defense to the law firm in the building
owner’s lawsuit?