Nakles v. Union Real Estate Company of Pittsburgh

In Nakles v. Union Real Estate Company of Pittsburgh, 415 Pa. 407, 204 A.2d 50 (1964), tenants brought a breach of contract action against their landlord with respect to their agreement to lease a commercial property for the tenants' restaurant business. The tenants' evidence established that the parties had agreed upon the terms of the lease; the tenants had paid one month's rent; and the landlord had prepared a lease that the tenants had signed and returned. Nakles, 415 Pa. at 409, 204 A.2d at 51. The landlord, who had not signed the lease, claimed that there was no lease and, therefore, he was free to rent the property to another tenant at a higher rent. The Supreme Court held that given these circumstances, the tenants proved the existence of a tenancy at will, which is the maximum real property interest that can be conveyed orally under the Statute of Frauds. Stated otherwise, the tenants were not entitled to enforce the terms of their lease. The tenants were also able to pursue damages, but those damages were limited to recovery of their out-of-pocket expenses. To allow the tenants their claim for lost profits would have effectively given the tenants specific performance of their unexecuted lease, which would have violated the Statute of Frauds.