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Lucy, Esq.
Lucy, Esq., Attorney
Category: Legal
Satisfied Customers: 30375
Experience:  Lawyer
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My wife and started a bakery business and incorporated it

Customer Question

My wife and started a bakery business and incorporated it last year. In August we signed a 12 month lease and paid a $500 deposit to a local Mall for an in-line store. They were expecting an existing store to break their lease and leave early. With a signed lease in hand we went out and purchased equipment for the bakery/cafe, furniture and paid a contractor to prepare the plans for submission to the health department and city. Come the start of the month the Mall (a large mall management company by the way) said we could not move in because their existing client did not move out. Now we have been told by the owner of the store that they are moving out at the end of the month. But the Mall manager said they have another party interested in the space. What options do we have legally to recoup our losses? Can we sue for loss of business. We had planned to be open by the holidays - the busiest time of the year.
Submitted: 2 years ago.
Category: Legal
Expert:  Lucy, Esq. replied 2 years ago.


I'm Lucy, and I'd be happy to answer your questions today. I'm sorry to hear that this happened.

The signed lease is binding, which means that the landlord is responsible for paying any expenses incurred as a result of the breach. That could include the costs of storing the equipment until a new property could be found. That could include interest paid on equipment you couldn't use because you didn't have a store. It can also include the price difference between the original 1 year lease and the cost of opening a new bakery somewhere else. The one thing it'll be difficult to recoup is lost profits, because it's a new business and so many new businesses lose money at first. So that could be a problem. You may need evidence of what the store earned during it's first month open, or some kind of projections from an expert showing what you would've been able to earn if the story had opened on time.

The mall manager is obligated to give you that space at the end of the month. If that space is special, you could try having a local attorney file a request for a restraining order to prohibit the owner from leasing to someone else instead of you at the end of the month. Also look at the lease to see if it allows you to seek attorney's fees when you have to bring an action to enforce it. If it does, letting the manager know that you're going to sue the mall and they'll have to pay your attorney's fees could help them decide to lease you the space, after all.