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Talking in Circles
by Ron Davis

A prudently worded disclaimer has allowed the owners of an Indiana shopping center to thwart a tenantís charges that they fraudulently misled him during lease negotiations.

The shopping center, Circle Centre Mall in Indianapolis, had leased space to the tenant to operate a restaurant there. And the disclaimer was apparently inserted into the lease to prevent any misunderstandings about the tenantís potential success.

The disclaimer stated, in part, that the tenant ďhas not relied upon any inducements or representations on the part of Landlord or Landlordís representatives.Ē The tenant signed the lease, thereby agreeing to accept the terms of that disclaimer.

Some three years later, however, the tenant had fallen behind in paying his rent, and the shopping centerís owners sued. The tenant responded by countersuing, claiming that the shopping centerís owners had induced him to sign the lease using fraudulent representations.

Specifically, the tenant maintained that during lease negotiations, the shopping centerís owners had misled him by misstating the dollar amount of retail sales generated by other tenants in the mall.

The shopping centerís owners pointed out, however, that any oral representations made to the tenant during lease negotiations couldnít be fraudulent. Thatís because, they added, the lease disclaimer supersedes any prior oral discussions.

An Indiana appellate court agreed with the shopping centerís owners, explaining, ďThe tenant cannot have it both ways. He cannot state in writing thatÖhe Ďhas not relied upon any inducement or representationsí and then, after the fact, repudiate that provision. Given the disclaimer, and without any allegation that the disclaimer itself was procured by fraud, the tenant has failed to demonstrate on the face of the pleadings that he had a right to rely on any alleged misrepresentations.Ē (Circle Centre Development v. Y/G Indiana, 762 N.E.2d 176 [Ind.App. 2002])

Decision: February 2002
Published: June 2002



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