OPINION OF THE COURT
In this case, we consider whether a lease renewal option that provides for arbitration if the parties cannot agree on rent for the renewal period is indefinite and therefore unenforceable. We agree with the Appellate Division that the option is not an invalid "agreement to agree” because the arbitration clause provides an objective standard for determining the amount of rent. Accordingly, the order of the Appellate Division should be affirmed.
The appellant in this proceeding is the landlord, 151 East Post Road Corp., and the respondent is the tenant, 166 Mamaroneck Avenue Corp. Both are successors in interest to parties that signed a 42-year commercial lease in 1946 for a parcel in White Plains. The term ran from January 1, 1947 to January 1, 1989. The lease gave the tenant, its successors, or assigns the "right, option and privilege” to renew the lease for another 21-year term on the samе conditions and terms as those contained in the original lease except for the amount of rent. According to the agreement, if the parties were unable to agree to thе rent, "the same shall be fixed by arbitration as provided for by the Civil Practice Act of the State of New York.”
The tenant notified the landlord of its intention to exercise the option and renеw the lease. The parties entered into negotiations but were unable to agree on a new rent for the renewal period. In November of 1986, the landlord filed a demand for arbitration with the American Arbitration Association seeking determination of the market rental value of the parcel for the 21-year renewal period. The demand was later withdrawn. In Septembеr of 1988, the landlord notified the tenant that it deemed the tenant’s rights and interests in the parcel as terminating on January 1, 1989, the original expiration date set forth in the lease.
By service of notice of petition and petition verified October 19, 1988, the tenant commenced a proceeding in Supreme Court, Westchester County, for appointment of an arbitrator pursuant to CPLR 7504. The landlord cross-moved for dismissal of the proceeding for failure to state a cause of action "in that the renewal provision contained in the lease [was] an
The doctrine of definiteness or certаinty is well established in contract law. In short, it means that a court cannot enforce a contract unless it is able to determine what in fact the parties have agreed to (see, 1 Corbin, Contracts § 95, at 394). As we noted recently in Cobble Hill, "[i]f an agrеement is not reasonably certain in its material terms, there can be no legally enforceable contract” (
This Court, however, has not applied the definiteness doctrine rigidly. Contracting parties are oftеn imprecise in their use of language, which is, after all, fluid and often susceptible to different and equally plausible interpretations. Imperfect expression does not necessarily indiсate that the parties to an agreement did not intend to form a binding contract. A strict application of the definiteness doctrine could actually defeat the underlying expeсtations of the contracting parties (Cobble Hill Nursing Home v Henry & Warren Corp., supra, at 483). Thus, where it is clear from the language of an agreement that the parties intended to be bound and there exists an objective method for suрplying a missing term, the court should endeavor to hold the parties to their bargain (see, 1 Williston, Contracts § 46, at 152-153 [3d ed]). Striking down a contract as indefinite and in essence meaningless "is at best a last resort” (Cohen & Son v Lurie Woolen Co.,
In Martin Delicatessen (supra), wе identified two ways in which the requirement of definiteness could be satisfied in the absence of an explicit contract term: (1) an agreement could
We looked to these principles for guidance when we revisited the definiteness doctrine in the Cobble Hill case. There, the tenant had an option to purchase a nursing home owned by the defendant "at a price determined by the Department [оf Health] in accordance with the Public Health Law and all applicable rules and regulations of the Department” (id., at 480). The defendant refused to sell the facility to the tenant, cоntending that the price term contained in the option was void for indefiniteness (id., at 481). We held the option enforceable, concluding that the parties’ intent that a third person fix the sales price for the nursing home "itself provided] an objective standard without the need for further expressions by the parties” (id., at 483). We noted that it was apparent from the agreement that thе parties rested discretion in the Department of Health to calculate the sales price, "limited only by the requirement that it apply provisions that were suitable, pertinent and аppropriate for the task at hand.” (Id., at 484.)
In the case now before us, we examine a contract in which the parties have expressly provided that a third party, an arbitrator, is to determine the price term in the event they are unable to reach an agreement on their own. As in Cobble Hill, the contract does not spell out the precise manner in which the amount of rent is to be calculated. The landlord argues that this renders the clause unenforceable. We disagree. The original parties to the lease themselves selected a proсess for the calculation of rent for the renewal term. They clearly intended to be bound by the arbitrator’s determination. Arbitration, while a process and not a methodology per sе, implicates the participation and decision making of a neutral third party. We conclude that by providing for this eventuality and agreeing to be bound by the result, the parties "invited recоurse to an objective extrinsic event, condition or standard on which the amount was made to depend” (Martin Delicatessen v Schumacher, supra, at 110), and that the renewal term is consequently definite and enforceable.
That the third party in this case is an arbitrator and not a
Further, a rich body of common law supplements CPLR article 75. Arbitration is a favored method of dispute resolution in New York, as this Court has reрeatedly held (Matter of Weinrott [Carp], 32 NY2d 190, 199; see also, Sablosky v Gordon Co.,
Thus, while this case is not identical to Cobble Hill, we believe that our reasoning in that case applies with equal force here. We do not doubt that the original parties to the lease fully intended to be bound by their agreement. The decision of these parties to submit any dispute as to the amount of rent payable during the renewal period to an
We have considered appellant’s remaining arguments and we find them to be without merit.
Accordingly, the order of the Appellate Division should be affirmed, with costs.
Judges Simons, Kaye, Alexander, Titone, Hancock, Jr., and Bellacosa concur.
Order affirmed, with costs.