Commercial Resource Group, LLC v. The J.M. Smucker Co., No. 12-3308 (8th Cir. 2014)
Annotate this CaseThis dispute arose from the lease of a commercial building from CRG to Smucker. The lease provided that, after its initial term, it would automatically renew unless Smucker provided written notice of its intent to terminate the lease 180 days prior to the end of the current term. When the termination notice to CRG arrive after the deadline, CRG refused to accept the notice and filed suit against Smucker. The court concluded that it would be unconscionable to hold Smucker to the renewal because Smucker had substantially performed its lease obligations. The court concluded that the district court erred in failing to treat the cancellation provision in this case as an option to terminate. The court also concluded that there was insufficient evidence to conclude as a matter of law that enforcing the terms of the lease against Smucker would cause Smucker such hardship as to make literal enforcement of the option unconscionable. Accordingly, the court reversed and remanded for further proceedings.
Court Description: Civil case - Contracts. As an option to terminate a lease, the lease's cancellation provision must be strictly construed and requires exact compliance, and when Smucker failed to terminate the parties' lease in accordance with the lease provision, the district court erred in finding it was unconscionable to enforce the lease given Smucker's substantial compliance with the termination provision; the harm Smucker would suffer was not so great as to rise the level of substantive unconscionability. Judge Colloton, dissenting.
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