Make billboard lease termination dependent on your opinion of economic feasibility.  That’s the lesson of M-59 Joy vs Lamar Advertising.  Here are the facts.

• In 2008, Lamar Advertising entered into leases for 2 billboards in Michigan on land owned by M-59 Joy, LLC.  The leases had a 10 year terms and annual rent of $24,000 per billboard.  The leases contained a clause giving Lamar the right to terminate the lease if  “the sign becomes entirely or partially obstructed in any way or in Lessee’s option the location becomes economically or otherwise undesirable…”
• In 2009 Lamar requested a huge reduction in rent to $3,706 per billboard due to the Great Recession.  When M-59 Joy declined, Lamar terminated the lease, entered into a cheaper lease with an adjacent property owner and moved the billboards.
• M-59 Joy sued Lamar alleging breach of contract for not abiding by the 10 year lease.  M-59 argued that the lease could not be terminated if the rent became economically undesirable but only if the location became economically undesirable based on traffic counts or impressions.
• A lower court ruled in favor of Lamar stating that the evidence showed the location was economically undesirable: “Plaintiff concedes that Defendant was able to, and did, enter into leases for billboards in virtually the same location with a different company for a lower rental rate…the Court is convinced that such circumstances rendered the locations rented under the Leases economically undesirable in light of the fact that Defendant could obtain billboard space in the same general area for less money.”
• In 2017, The Michigan State Court of Appeals upheld the lower court ruling and stated that the only thing that mattered was Lamar’s opinion: “…under the clear and unambiguous language of the termination clause, the pertinent question is whether the location became economically undesirable in defendants opinion.  Plaintiff does not dispute that the defendant genuinely held the option that the location become economically undesirable, which effectively harpoons plaintiff’s action for breach of contract.”

Billboard Insider’s take:  Every out of home lease should have a clause which allows you to terminate if the lease becomes economically undesirable in your opinion.

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