52 N.Y.2d 105, 436 N.Y.S.2d 247, 417 N.E.2d 541 (N.Y. 1981)
Joseph Martin, Jr., Delicatessen, Inc. v.
Is a lease renewal clause that provides rent shall be "to be agreed upon" enforceable, such that a court may fix a "reasonable rent" when the parties fail to agree, even though the lease supplies no objective standard or method to determine rent?
Under New York common law, a contract is not enforceable unless its material terms are reasonably certain. An agreement that leaves a material term—such as rent in a lease—open for future agreement, without providing an explicit formula, objective standard, or agreed method of determination (e.g., appraisal, arbitration, CPI, market-rate formula), is an unenforceable agreement to agree. Courts will not supply an essential term or make a new contract for the parties. The UCC's permissive gap-filling regime for open price terms in the sale of goods (e.g., UCC § 2-305) does not apply to real estate leases.
No. The renewal clause was too indefinite to enforce because it left the essential rent term for future agreement and provided no objective method to fix it. The Court of Appeals reversed and dismissed the complaint; courts may not impose a "reasonable rent" in these circumstances.
The case is a cornerstone of New York's doctrine against enforcing bare agreements to agree, especially in real estate. It teaches that courts will not rescue parties from imprecise drafting by supplying essential terms or implying a duty to agree on reasonable figures. For practitioners and students, the lesson is practical and sharp: if parties want a binding renewal option, they must nail down rent or adopt an objective, external method to determine it. The opinion also provides a clear contrast with the UCC's gap-filling rules, reminding students that openness tolerated in goods contracts is not readily imported into real property or many common-law settings.