Pack 2000, Inc. v. Cushman ( 2014 )

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PACK 2000, INC. v. CUSHMAN—DISSENT
ZARELLA, J., dissenting. I agree with the majority
that an optionee must express his election to accept
an option in strict accordance with its terms and condi-
tions. I do not agree, however, that there should be a
different compliance standard applied to other condi-
tions precedent to the optionor’s duty to perform. Many
option contracts contain conditions relating to the form
of acceptance, such as requiring notice in writing within
a specified period of time. Other options provide addi-
tional conditions that the optionee must satisfy prior
to exercising the option, such as compliance with the
terms of a lease. All of these conditions are, in effect,
part of the performance that the optionee must com-
plete in order to accept the offer. In my view, if strict
compliance applies to some conditions, it should apply
to all conditions, both from a commonsense perspective
and in light of this court’s decision in Brauer v. Freccia,
159 Conn. 289, 268 A.2d 645 (1970), which requires an
optionee to fully comply with all ‘‘named conditions
. . . .’’ Id., 294. This is especially true when, as in the
present case, the option is part of a commercial transac-
tion between sophisticated parties. I finally observe that
the application of the doctrine of substantial perfor-
mance to unilateral contracts is inappropriate because
it protects rights that optionees do not yet possess.
Accordingly, I respectfully dissent.
I begin with the applicable law regarding option con-
tracts and conditions precedent. ‘‘A unilateral contract
is one in which the offeror invites acceptance of his
promise not by a reciprocal promise, but by perfor-
mance. . . . [I]n such a contract, there is no mutuality
of obligation between the parties. See generally 1 E.
Farnsworth, [Farnsworth on] Contracts (1990) § 3.24
[pp. 290–91] . . . .’’ (Citation omitted; emphasis
added.) Torosyan v. Boehringer Ingelheim Pharma-
ceuticals, Inc., 234 Conn. 1, 13 n.4, 662 A.2d 89 (1995).
Option contracts are a type of unilateral contract. See,
e.g., Williams v. Lilley, 67 Conn. 50, 56, 34 A. 765 (1895).
An option to purchase real estate, therefore, is ‘‘a contin-
uing offer to sell, irrevocable until the expiration of the
time period fixed by agreement of the parties, which
creates in the option holder the power to form a binding
contract by accepting the offer.’’ (Internal quotation
marks omitted.) Bayer v. Showmotion, Inc., 292 Conn.
381, 409, 973 A.2d 1229 (2009). The optionee may accept
this offer and form a binding, bilateral contract of sale
through performance ‘‘according to the precise terms
and conditions of the contract.’’ (Emphasis added; inter-
nal quotation marks omitted.) Pigeon v. Hatheway, 156
Conn. 175, 183, 239 A.2d 523 (1968).
Thus, ‘‘[t]he offeror’s duty of performance under any
option contract so created is conditional on completion
or tender of the invited performance in accordance
with the terms of the offer.’’ (Emphasis added.) 1
Restatement (Second), Contracts § 45 (2), p. 118
(1981).1 Put another way, in order to convert the unilat-
eral option contract into a binding, bilateral contract
for sale, the optionee must ‘‘[accept] the offer according
to its terms . . . [by] perform[ing] the conditions con-
tained in the offer.’’ Buchannon v. Billings, 127 Vt. 69,
74, 238 A.2d 638 (1968); see also Brauer v. Freccia,
supra, 159 Conn. 293–94 (‘‘[The] language [of the option]
clearly indicates that the [lessor’s] duty to comply with
the terms of the option was conditioned [on] the [les-
sees’] punctual performance of their obligations under
the lease. A [lessee] who fails to meet the named condi-
tions of his lease defeats his right to rely on it when
he makes an effort to purchase the property pursuant
to the option in the lease.’’ [Emphasis added.]).2
I see no logical reason to apply different compliance
standards to different conditions precedent in an option
contract when determining whether a party has com-
plied with the conditions of the contract.3 Option con-
tracts may contain numerous conditions precedent. For
example, some option contracts provide that the
optionee must communicate his election to accept the
option in a certain way, such as providing written notice
within a specified period of time.4 Other option con-
tracts, such as the one at issue in the present case,
impose additional conditions precedent, such as com-
pliance with the terms of a lease.5 At times, a condition
precedent might be outside the control of the parties.6
Often, however, the condition is entirely within the
control of the optionee, such as ensuring that the terms
of a lease are satisfied. Because conditions precedent
within the control of the optionee must be satisfied by
the optionee, the satisfaction of these conditions is the
‘‘performance’’ that constitutes the ‘‘acceptance’’ of the
offer so as to trigger the optionor’s obligation to
perform.
Our precedent does not distinguish between various
types of conditions precedent.7 In Brauer v. Freccia,
supra, 159 Conn. 291, the lessees and the lessor entered
into a lease on August 28, 1962, providing that, ‘‘if the
[l]essees shall have duly and punctually fulfilled all of
the provisions, agreements, covenants and conditions
of this lease . . . the [l]essor, on the receipt of written
notice from the [l]essees stating that the [l]essees elect
to purchase the leased premises . . . will convey the
leased premises to the lessees on and subject to [cer-
tain] conditions [including the following] . . . . It is
agreed that this option to purchase may be exercised
only by the [l]essees giving the written notice to the
[l]essor above provided for at least sixty . . . days
prior to the expiration of this lease or any renewal
thereof.’’ (Internal quotation marks omitted.) Id., 291
n.1. ‘‘As of April 1, 1967, [the lessees] had failed to
make seven monthly payments of $350 each, causing
an arrearage of $2450. As of the date of the trial they
had failed to make a further monthly payment of $350
thereby causing a total arrearage of $2800.’’ Id., 292. On
April 18, 1967, the lessees provided written notice to
the lessor, ‘‘stating that they wished to purchase the
property under the terms of the option.’’ Id. The lessor
then ‘‘caused a notice to quit to be served on the [les-
sees], claiming nonpayment of rent.’’ Id.
This court determined that ‘‘the language [of the
option was] lucid and unambiguous in stating that the
[lessor] . . . was obligated under the option clause ‘if
the [l]essees shall have duly and punctually fulfilled all
the provisions, agreements, covenants and conditions
of [the] lease.’ This language clearly indicate[d] that the
[lessor’s] duty to comply with the terms of the option
was conditioned [on] the [lessees’] punctual perfor-
mance of their obligations under the lease. A [lessee]
who fails to meet the named conditions of his lease
defeats his right to rely on it when he makes an effort
to purchase the property pursuant to the option in the
lease. Lake Shore Country Club v. Brand, 339 Ill. 504,
522, 171 N.E. 494 [1930].’’ (Emphasis added.) Brauer v.
Freccia, supra, 159 Conn. 293–94. Accordingly, the
court concluded that, because ‘‘the [lessees] had failed
to perform their obligations under the lease, the right
to enforce the option to purchase was not in existence
and the [lessor was] under no obligation to convey the
property.’’ Id., 294.
The majority posits that the lessees’ breach in Brauer
was ‘‘material’’ and thus assumes that ‘‘there is nothing
in Brauer to suggest that a nonmaterial breach of the
lease also would have defeated the option rights of the
lessees in that case.’’ Text accompanying footnote 9 of
the majority opinion. I disagree. First, the language in
Brauer is broad, referring to ‘‘named conditions’’ of
the lease without distinguishing between material and
immaterial terms. Brauer v. Freccia, supra, 159 Conn.
294. Second, there is no reason for the court to have
engaged in a materiality analysis, as the material versus
immaterial distinction derives from the doctrine of sub-
stantial performance, not the law of unilateral contracts
and options in this state. Third, in light of the facts of
the present case, even if it is assumed that materiality
is the proper test, which it is not, the breaches in the
present case are clearly material, and, thus, even the
standard of substantial performance has not been sat-
isfied.
The doctrine of substantial performance, in my view,
should not be extended to unilateral contracts. ‘‘[This]
doctrine is generally applicable to bilateral contracts
for an agreed exchange of performances.’’ (Emphasis
added.) J. Calamari & J. Perillo, The Law of Contracts
(4th Ed. 1998) § 11.18 (b), p. 417. That is, ‘‘[t]he doctrine
of substantial performance . . . is generally only appli-
cable to contractual provisions in which a party is
affirmatively obligated to perform. See generally 3A
A. Corbin, [Corbin on] Contracts [1960] §§ 700–701 [pp.
308–15]; 6 [W. Jaeger, Williston on] Contracts (3d Ed.
[1962]) § 842 [pp. 165–71].’’ (Emphasis added.) Analyti-
cal Design & Construction Group, Inc. v. Murray, 690
P.2d 269, 272 (Colo. 1984). ‘‘Consequently, the doctrine
of substantial performance is not applicable to a unilat-
eral [agreement] . . . .’’ (Emphasis added.) Id., 273.8
The application of the substantial performance doc-
trine to unilateral contracts prematurely grants option-
ees rights that have not yet vested. ‘‘The doctrine is
intended to protect the right to [performance] of those
who have performed in all material and substantive
particulars, so that their right to [performance] may not
be forfeited by reason of mere technical, inadvertent, or
unimportant omissions or defects.’’ (Internal quotation
marks omitted.) In re Centennial Park, LLC, 461 B.R.
853, 863 (Bankr. D. Kan. 2011). In a unilateral contract,
however, the optionee does not have a right to exercise
the option, let alone a right to performance, until the
optionee has accepted the offer through performance
of the named conditions. Therefore, application of the
doctrine of substantial performance in this context pro-
vides the optionee with rights that he simply does not
have.9 It also strips the optionor of the benefits of his
bargain, as conditions precedent often are part of the
consideration for the option itself. Finally, it deprives
both parties of a degree of economic certainty that
is particularly beneficial in a commercial context. See
Loitherstein v. International Business Machines
Corp., 11 Mass. App. 91, 94, 413 N.E.2d 1146 (1980)
(‘‘holding the possessor of a unilateral right of this sort
to literal compliance with the requirements for its exer-
cise enforces commercial certainty’’). Accordingly, I
conclude that the optionee must perform all conditions
in strict accordance with their terms.
Turning to the issue in the present case, I conclude
that the plaintiff, Pack 2000, Inc., did not strictly comply
with the terms of the lease agreements, letter of intent,
and management agreement and, thus, is not entitled
to specific performance. The options at issue provided
in relevant part: ‘‘So long as [the plaintiff] has been in
compliance with the terms and conditions of [the]
Lease, the Letter of Intent, and [the] Management
Agreement . . . and is in compliance with such instru-
ments when the option is exercised, [the plaintiff] shall
have the option to purchase the real estate subject of
this lease.’’10 The trial court found, pursuant to the terms
of the lease agreements, letter of intent, and manage-
ment agreement, that the ‘‘[p]laintiff was required to
make periodic payments to [the defendant, Eugene C.
Cushman] and to third parties’’ and that the ‘‘[p]laintiff
was sometimes late in making . . . payments and [that
the defendant] frequently contacted [the] plaintiff
regarding these late payments.’’11 Because the language
of the options required compliance not only at the time
of exercise, but also at all times prior thereto, the plain-
tiff forfeited its right to exercise the options as soon
as it made a late payment,12 even though it was not in
arrears at the time of trial.13 Therefore, because the
plaintiff in the present case ‘‘fail[ed] to meet the named
conditions of [its] lease[s],’’ the plaintiff ‘‘defeat[ed] [its]
right to rely on [the options] when [it made] an effort
to purchase the property pursuant to the option[s] in
the lease[s].’’ Brauer v. Freccia, supra, 159 Conn. 294.
I am particularly concerned that the majority’s sub-
stantial performance analysis rewrites the options.
Under a logical extension of the majority’s construction,
the plaintiff would have to be in compliance with the
lease agreements, letter of intent, and management
agreement only at the time it exercises the options.
That is, the plaintiff would be able to cure its prior
noncompliance by settling any arrearages before exer-
cising the options. The options, however, required that
the plaintiff ‘‘has been in compliance . . . and is in
compliance . . . when the option[s] [are] exercised
. . . .’’ (Emphasis added.) This language signifies that
past noncompliance cannot be cured, at least not by
the optionee.14
Finally, I emphasize that the agreements between the
plaintiff and the defendant constituted a commercial
transaction between two sophisticated parties, both of
whom contributed to the drafting of these contracts and
previously participated in similar transactions. Thus,
there is even less reason for the majority to insert itself
into the contract and change its terms. The plaintiff’s
vice president, M. Paulina Anderson, testified that she
provided the letter of intent and management agree-
ment, and negotiated with the defendant to modify both
documents. The defendant’s testimony corroborates
the fact that both parties actively participated in the
negotiation and ultimate drafting of these documents.
Furthermore, Anderson appears to have extensive
experience in the acquisition of Midas automobile
repair shops, as she testified to having assisted in the
acquisition of thirty-two such shops since 1991. In the
present case, the language of the agreements indicates
that the timely payment of financial obligations was the
only consideration the defendant would have received
for entering into the option contracts. The defendant
testified that ‘‘it was very, very important that every-
thing [got] paid . . . on time’’ because the defendant
‘‘had to make payments from [the plaintiff’s] payments,’’
and, ‘‘if [he, the defendant] didn’t make the payments
. . . to Midas . . . Midas could pull the franchise
. . . . If [he, the defendant] didn’t make the payment
for [his] mortgage [he] was going to lose the real estate.’’
Furthermore, any late payment or nonpayment of the
plaintiff’s health insurance obligations would ‘‘jeopar-
diz[e] all of [the defendant’s] health insurance.’’
Because the timeliness of these payments was so
important, the defendant ‘‘made it perfectly clear to
[the plaintiff]’’ that compliance with the terms of the
lease agreements, letter of intent, and management
agreement was necessary by including this condition
in the options.
The defendant, however, did not get the benefit of
his bargain, as the plaintiff consistently made late pay-
ments on many of its obligations, or, at times, did not
make payments at all. Specifically, the Appellate Court
observed: ‘‘[T]he record reveals that the following pay-
ments were late: the rent payment due on May 1, 2004;
three payments on the promissory notes due on Febru-
ary 8, 2003, and May 8 and June 8, 2006; one payment
to Groton Utilities, which resulted in a shutoff notice
that the defendant forwarded to the plaintiff on January
23, 2003; several payments to a telephone company,
which resulted in several collection letters and tele-
phone calls that the defendant received in late 2002 and
early 2003 as well as a threat to terminate telephone
service to the defendant’s unrelated business in March,
2003; two real estate tax installments on the New Lon-
don [Midas] shop due January 1, 2005, and January 1,
2007; one real estate tax installment on the Groton
[Midas] shop due July 1, 2007; twelve hazard and liability
insurance installments between November, 2002, and
January, 2004, that resulted in cancellation notices
issued on July 30, 2003, and November 29, 2004; twenty
health insurance installments between October, 2002,
and September, 2005; and several installments under
the terms of an equipment lease that resulted in several
collection calls to the defendant in 2002 and 2003.’’ Pack
2000, Inc. v. Cushman, 126 Conn. App. 339, 343–44,
11 A.3d 181 (2011). The majority’s construction of the
contract thus forces the defendant to comply with an
agreement to which he did not agree.
In sum, strict compliance should apply to all condi-
tions of an option contract, not just those relating to the
election to accept the offer. In addition, in the context of
an option to purchase real estate, I would conclude
that ‘‘[t]here is no completed contract for sale of the
property described in an option until the optionee has
accepted the offer according to its terms, or to put it
otherwise, has performed the conditions contained in
the offer.’’ (Emphasis added.) Buchannon v. Billings,
supra, 127 Vt. 74; see also Howard-Arnold, Inc. v. T.N.T.
Realty, Inc., 145 Conn. App. 696, 710, 77 A.3d 165
(‘‘[o]ptions . . . require optionees to exercise them in
strict compliance with their terms’’), cert. granted, 310
Conn. 940, 940–41, 79 A.3d 892 (2013). Because I would
uphold the judgment of the Appellate Court but direct
that court to remand the case to the trial court for
a determination of whether the defendant waived the
plaintiff’s noncompliance; see footnote 13 of this opin-
ion; I respectfully dissent.
1
I note that comment (e) to § 45 of the Restatement (Second) suggests that
full performance may be excused only ‘‘if the offeror prevents performance,
waives it, or repudiates.’’ Restatement (Second), supra, § 45, comment (e),
pp. 120–21.
2
See Smith v. Hevro Realty Corp., 199 Conn. 330, 339, 507 A.2d 980 (1986)
(‘‘The principles that govern the interpretation of an option contract are
well-settled. To be effective, an acceptance of an offer under an option
contract must be unequivocal, unconditional, and in exact accord with
the terms of the option.’’ [Internal quotation marks omitted.]); Lake Shore
Country Club v. Brand, 339 Ill. 504, 522, 171 N.E. 494 (1930) (‘‘An option
contract gives to the optionee a right under the named conditions. If those
conditions are not met the optionee does not acquire the right.’’); LeBaron
Homes, Inc. v. Pontiac Housing Fund, Inc., 319 Mich. 310, 315, 29 N.W.2d
704 (1947) (‘‘[a]n option may ripen into a binding bilateral contract of pur-
chase and sale by a seasonable exercise of the option and compliance with
its terms by the optionee’’); Buchannon v. Billings, supra, 127 Vt. 74 (‘‘If
conditions precedent to the right to convert a unilateral contract into a
bilateral one are not met the unilateral contract does not become bilateral.
. . . There is no completed contract for sale of the property described in
an option until the optionee has accepted the offer according to its terms,
or to put it otherwise, has performed the conditions contained in the offer.’’
[Citations omitted.]).
3
The majority does not appear to contest that ‘‘[t]he rule of substantial
compliance with the terms of the contract which is applicable to bilateral
contracts whereby both parties are already bound is not applicable to the
exercise of an option . . . .’’ (Emphasis added.) Jones v. Horner, 36 Tenn.
App. 657, 660, 260 S.W.2d 198 (1953).
4
See, e.g., Smith v. Hevro Realty Corp., 199 Conn. 330, 343, 507 A.2d 980
(1986) (concluding that optionee failed to exercise its option in accordance
with terms of agreement because it did not tender deposit required at time
of its verbal acceptance of option); see also Saewitz v. Epstein, 6 F. Supp.
2d 151, 157 (N.D.N.Y. 1998) (‘‘[T]he actual exercise of an option contract
by the optionee is the performance of a condition precedent to the optionor’s
duty to perform. [1A A. Corbin, Corbin on Contracts (1950)] § 264 [p. 509].’’).
5
See, e.g., Brauer v. Freccia, supra, 159 Conn. 293–94 (concluding that
optionee did not have right to enforce option to purchase because he did
not comply with terms of option, which required that optionee ‘‘shall have
duly and punctually fulfilled all the provisions, agreements, covenants and
conditions of [the] lease’’ [internal quotation marks omitted]); Pear v. Daven-
port, 67 Mass. App. 239, 245, 853 N.E.2d 206 (2006) (concluding that tenants
were not entitled to specific performance of option to purchase property
when they failed to comply with terms of lease by not making timely
rental payments).
6
See, e.g., Bennett v. Foust, 996 P.2d 693, 696–97 (Wyo. 2000) (death of
shareholder was condition precedent to option).
7
Some other jurisdictions similarly do not make this distinction. See, e.g.,
Beecher v. Morse, 286 Mich. 513, 516, 282 N.W. 226 (1938) (‘‘[a]n option is
but an offer, strict compliance with the terms of which is required; accep-
tance must be in compliance with the terms proposed by the option both
as to the exact thing offered and within the time specified; otherwise the
right is lost’’ [internal quotation marks omitted]); Raanan v. Tom’s Triangle,
Inc., 303 A.D. 2d 668, 669, 758 N.Y.S.2d 343 (2003) (‘‘[i]t is well settled
that one attempting to validly exercise an option to purchase real property
must strictly adhere to the terms and conditions of the option contract’’).
8
See People v. Mohammed, 162 Cal. App. 4th 920, 932–33, 76 Cal. Rptr.
3d 372 (2008) (‘‘the judicially created doctrine of substantial compliance is
not available . . . [for] a unilateral contract’’); St. Paul at Chase Corp. v.
Manufacturers Life Ins. Co., 262 Md. 192, 229, 278 A.2d 12 (‘‘[w]hile the
doctrine of substantial performance is applied most frequently in building
and construction contracts, it is not so limited and may be applied in the
case of any kind of contractual obligation to perform’’ [emphasis added;
internal quotation marks omitted]), cert. denied, 404 U.S. 857, 92 S. Ct. 104,
30 L. Ed. 2d 98 (1971); Creed v. Apog, 6 Mass. App. 365, 372–73, 376 N.E.2d
154 (1978) (‘‘[S]ubstantial performance . . . applies only to bilateral con-
tracts in which the parties have agreed to exchange performances without
making either performance expressly conditional on the other or on the
occurrence of a particular event. . . . To apply the substantial performance
doctrine in a case . . . in which [a party’s] performance was expressly
conditioned [on] the occurrence of events [that] never happened . . . would
result in the court’s mak[ing] a contract for the parties contrary to [i]ts duty
. . . to construe the contract [that] they fully understood and entered into
voluntarily.’’ [Citations omitted; footnote omitted; internal quotation marks
omitted.]), vacated on other grounds, 377 Mass. 522, 386 N.E.2d 1273 (1979).
9
As a result of the differences between unilateral and bilateral contracts,
courts have determined that other doctrines that normally apply to bilateral
contracts should not apply to unilateral agreements. In Lake Shore Country
Club v. Brand, supra, 339 Ill. 504, the Illinois Supreme Court determined
that the equitable rule against forfeitures, which applied to bilateral contracts
such as leases, did not apply to option contracts: ‘‘An option contract does
not come within the equitable rule against forfeitures. . . . An option con-
tract gives to the optionee a right under the named conditions. If those
conditions are not met the optionee does not acquire the right. Such a
situation involves none of the elements of a forfeiture. It deprives no party
of any right and abrogates no contract, but, on the other hand, is but the
enforcement of the contract made by the parties. . . . A court of equity
cannot relieve the optionee from the effect of his failure to comply with
the conditions on which he has been granted the privilege of buying. This
would make a new contract for the parties and compel the owner to sell
when he had not agreed to do so. The optionee must perform all conditions
precedent to his right to purchase not waived by the optionor. In this respect
the denial of an option to purchase property differs from the forfeiture of
property rights already acquired under a bilateral contract. . . . Therefore,
unless the [optionee] has met the conditions of the option contract or
the conditions have been waived it is not entitled to exercise the option.’’
(Citations omitted.) Id., 522.
10
The majority states that the ‘‘option agreement’’ in the present case ‘‘is
not ‘a simple unilateral contract of option’ . . . . [R]ather, the option
agreement is but one component of the parties’ bilateral lease and manage-
ment agreements.’’ (Citation omitted; emphasis in original.) Footnote 12 of
the majority opinion. I disagree. First, the options, although made within
the context of other bilateral agreements, constitute separate agreements.
The management agreement provides that the option ‘‘shall be by separate
agreement and . . . shall cite separate consideration . . . .’’ That consider-
ation is compliance with the terms of the leases. The options thus reference
a bilateral contract to provide some of the terms and conditions, but that
reference does not, and should not, render the options themselves or their
conditions subject to the compliance standards of a bilateral agreement. As
I previously explained, this court has stated that an optionee must comply
with all ‘‘named conditions’’ of an option contract, including conditions set
forth in a separate bilateral agreement. Brauer v. Freccia, supra, 159 Conn.
294. To hold otherwise would mean that a condition would be held to a
different compliance standard depending on whether it was set forth in the
option itself or incorporated by reference in a bilateral agreement. As I
previously explained, there is no reason to hold different conditions in
an option contract to different compliance standards. Therefore, I would
conclude that strict compliance applies to all conditions regardless of
whether they are set forth in the option itself or in another agreement that
refers to the option.
11
For example, the management agreement requires that the plaintiff make
payments on the promissory notes on the first day of each month. The
agreement does not allow for a grace period for these payments. In February,
2003, however, the plaintiff was eighteen days late in making a payment on
one of the promissory notes. Thus, the plaintiff was not in compliance with
the management agreement and, accordingly, forfeited its right to exercise
the options. Although there is evidence in the record that the defendant
allowed the plaintiff to pay on the eighth of the month, and that the defendant
provided the plaintiff with a thirty day grace period, these facts are relevant
to whether there was a waiver, not whether the plaintiff was in compliance
with the terms of the agreements.
12
Although the lease agreements, letter of intent, and management
agreement do not provide a deadline by which the plaintiff must make
payments to third parties, it is clear that the plaintiff was not in compliance
with this condition under any standard. Because the options required the
plaintiff to have been in compliance with the agreements, the plaintiff would
have been out of compliance as soon as it missed a payment, thereby
forfeiting its right to exercise the options unless the defendant waived his
own rights under the options. For instance, the record reveals that an
insurance provider issued a cancellation notice on July 30, 2003, after the
plaintiff had failed to make payments for at least three months. The payments
to third parties are included in the lease agreements as ‘‘[a]dditional [r]ent,’’
and the lease agreements provide that, if ‘‘rent shall remain unpaid 10 days
after the same shall become payable . . . then this lease shall thereupon
terminate . . . .’’ Under any standard of compliance, three months of non-
payment would constitute noncompliance, and, therefore, the plaintiff’s right
to exercise the options would be extinguished in the absence of a waiver
by the defendant.
13
Because the trial court determined that the substantial performance
standard applied and was met in the present case, it did not make a factual
finding regarding whether the defendant waived the plaintiff’s noncompli-
ance by accepting the plaintiff’s late payments. Accordingly, I would remand
the case to the trial court so that it may make factual findings concerning
this issue.
14
I emphasize that the optionor may waive the optionee’s noncompliance,
as this court previously articulated in Brauer v. Freccia, supra, 159 Conn.
295. ‘‘Waiver is a species of estoppel. Both have roots in equity and may be
implied from the acts or conduct of the parties.’’ Frantz v. Romaine, 93
Conn. App. 385, 400, 889 A.2d 865, cert. denied, 277 Conn. 932, 896 A.2d
100 (2006). Waiver thus serves as a safety valve to protect optionees from
unscrupulous optionors, who otherwise might convince optionees that non-
compliance is acceptable and subsequently use that noncompliance as a
ground to extinguish the option.