Tenant Can’t Prove Oral Agreement to Modify Lease Term

What Happened: A tenant notified its landlord that it was experiencing financial difficulties and needed to terminate its two-year office lease six months early. Email and phone conversations ensued, but no written agreement was reached. So, when the tenant stopped paying rent and vacated the building with seven months remaining on the lease, the landlord sued for damages. The tenant claimed that the sides had orally agreed to modify the duration of the lease term, but the court disagreed and awarded the landlord $119,046 for unpaid rent, late fees, insurance premiums, utility bills, winterizing costs, and attorney fees.

Ruling: The Indiana court rejected the tenant’s appeal.

Reasoning: Although the lease didn’t expressly address the issue of modifications, the court noted that even a contract requiring written modification may be modified orally via subsequent contract, provided that all of the required elements to form a contract are present: offer, acceptance, consideration, and a meeting of the minds. 

The tenant, however, didn’t meet its burden of proving that the parties had actually agreed in the course of their phone conversation to modify the lease and thus create a new contract. The tenant provided conflicting evidence about what was said during the call. Nor did the email exchange, which was documented in writing, demonstrate the required offer, acceptance, consideration, and meeting of the minds. It simply confirmed the landlord’s receipt of the tenant’s offer to terminate early, while offering to buy some of the tenant’s equipment and/or try to find a job for one of its employees. “Such comments do not amount to a modification of lease terms,” the court concluded.  

• Derr Enters., LLC v. Union City Ind. Props., LLC, 2025 Ind. App. LEXIS 35, 2025 WL 517525