In the world of commercial leasing, it is often assumed that once a lease is fully executed and delivered, it becomes binding and enforceable. However, a recent decision by the Wisconsin Court of Appeals in MPI Wright LLC v. Goodin Co., 2025 WL 424583, demonstrates how the failure to include a critical term can invalidate a lease entirely.

On July 9, 2020, MPI Wright LLC (“MPI”) and Goodin Company (“Goodin”) entered into a commercial lease agreement for five years and two months. The lease stated that Goodin would pay $5.50 per square foot in base rent for the first year, with annual escalations of 2%. While the lease identified the premises by address and parcel number, it failed to specify the total square footage of the premises to which the base rental rate would be applied. Instead, the lease stated that “Base Rent … will be further set forth and confirmed in the Commencement Certificate.” The form of Commencement Certificate was attached as a lease exhibit and included blanks for the due date and the amount of the first rent payment.

Following execution, MPI delivered a completed Commencement Certificate to Goodin, including specific base rent figures and a payment schedule. Goodin, however, never signed the certificate and refused to pay rent. MPI sued for breach of contract.

Goodin responded by arguing that the lease was unenforceable under Wisconsin’s Statute of Frauds, which requires commercial leases to state the amount of rent with reasonable certainty. The Court of Appeals agreed.

In its opinion, the Court reasoned that “the amount of Base Rent cannot be determined from the language of the lease with reasonable certainty by a disinterested third party” because the total square footage number to which the $5.50 per square foot rate would be applied was not included in the lease.  The Court added that an equation to determine the rent may be used “…provided that the factors needed to calculate rent in the equation are sufficiently described…”

Although the listing flier and non-binding request for proposal recited that the square footage of the premises was 19,800 square feet, the Court held that these documents could not be used to “supply” the missing information (as opposed to being used to clarify an ambiguous term) in the lease because the lease itself did not state that the amount of rent was to be defined as set forth in those documents, nor was either document referenced in the lease.  Interestingly, the Court did not address whether this information was readily discoverable upon a measurement of the premises by a disinterested third party.  For example, other cases have held that rent during an option term that is to be based on “fair market value” is enforceable because a disinterested third party could rely on expert testimony to establish what that amount should be.  Perhaps the landlord’s attorneys failed to raise this argument.    

This case is a clear warning: even fully signed leases can be unenforceable if they fail to include essential business terms in a complete and independently determinable way. To avoid this result, commercial landlords and tenants should ensure all rent calculations are explicit and verifiable from the face of the lease and avoid deferring key economic terms to future documents or unsigned exhibits.