Lease “Signed Under Protest” Not Binding (And Have You Ever Heard Of “Grumbling Acceptance”?)

Sign contract(Pd)
What happens if a tenant signs a lease but writes "signed under protest" under the signature? According to the Appellate Division, it means the lease is not binding. More importantly, perhaps, the Appellate Division has never heard of the contract theory known as "grumbling acceptance." If this is one that you did not cover in law school, join the club.

In Bergenline Property Group, LLC v. Coto, defendant was a longtime tenant of premises owned by plaintiff. There was an oral lease between the parties for most of the tenancy. But, in 2013, plaintiff served a notice to quit on defendant, requiring defendant to sign a written lease and pay a security deposit or vacate the property. Defendant refused and plaintiff served another notice to quit, requiring defendant to vacate the property for refusing to agree to reasonable changes to the terms of the lease. Defendant did not vacate and plaintiff filed an eviction complaint.

At the hearing on plaintiff's eviction complaint, the parties agreed to allow the court to determine the reasonableness of several provisions in the proposed lease and modify the lease as necessary. The court did just that, issuing a written opinion that modified some of the terms of the lease. Despite defendant's prior agreement to be bound by the court-modified lease, defendant refused to sign it. Plaintiff then moved for a judgment of possession. At the hearing on that request, the court gave defendant another chance to sign the lease. In response, Defendant first delivered a lease with a signature that was not witnessed and a post-dated check for the security deposit. Plaintiff refused to accept both. Defendant then delivered a lease, signed by defendant and witnessed by defendant's counsel, and a money order for the security deposit. However, directly below defendant's signature on the lease appeared the words "signed under protest." Plaintiff refused to accept this lease as well, but gave defendant one more chance to come to plaintiff's counsel's office and sign the lease. Defendant was apparently driven to plaintiff's counsel's office, but refused to leave the car or execute a new lease.

Plaintiff then renewed its request for a judgment of possession. Defendant opposed the motion, arguing, among other things, that the "signing under protest" language did not change the document, and stating, "parenthetically," that if plaintiff was "offended" by that language, plaintiff could strike it. The court entered the judgment of possession, finding that, by placing the "signing under protest" language on the lease, there was no meeting of the minds, and therefore no binding contract. As a result, defendant failed to sign the lease and violated the court's order requiring her to do so.

Defendant appealed. The Appellate Division affirmed the trial court's decision. It held that a lease, like any other contract, was not binding without a meeting of the minds, evidenced by each side's express agreement to every term of the contract. Without absolute acceptance, there is no binding contract. When defendant placed the words "signing under protest" under her signature on the lease, she "manifested an intention that she did not assent to the terms of the modified lease, and thus did not comply with the court's order" requiring her to agree to the lease.

The Appellate Division rejected defendant's argument that inserting "signed under protest" in the lease was a legitimate reservation of defendant's rights. The Appellate Division held that the trial court had already ruled on the reasonableness of the lease so there was no rights for defendant to reserve. The Appellate Division distinguished that situation from one in which a party might reserve its rights in connection with an event that had not yet occurred but might be governed by the document being signed (i.e., the validity of a termination-at-death clause in a lease). 

The Appellate Division also rejected defendant's argument that her signature was a "grumbling acceptance" of the terms of the lease, and therefore defendant did not violate the court's order to accept it. I had never heard of this term before (but I like it), and apparently neither had the Appellate Division. It observed that no New Jersey court had ever adopted the theory, which, according to a treatise cited by defendant, occurs when a party expresses displeasure with a contract (the "grumbling" part) but nonetheless manifests its unconditional acceptance of the contract (the "acceptance" part). In addition to finding no support for this concept under New Jersey law, the Appellate Division also held that defendant never manifested an unconditional acceptance of the lease, therefore it was inapplicable.

Ultimately, the Appellate Division affirmed the trial court's ruling, but remanded the case back to the trial court to determine whether certain post-appeal conduct — plaintiff's acceptance of rent and the security deposit from defendant, defendant's unconditional signature of the lease, etc. — amounted to a waiver of plaintiff's right to seek a judgment of possession.

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