contract-law rental-property
Can/should a lease say what happens if a rule isn&#39;t followed?
<p>Let's say you have a lease for a rental property that says</p>

<ol>
<li>no smoking in the house</li>
<li>$5 will be charged for any unreturned keys at end of tenancy</li>
<li>no noisy parties</li>
</ol>

<p>For #1 what happens if the tenant is caught smoking in the house? Should #1 be rewritten to specify what would happen, for example "no smoking in the house or tenant would be charged for carpet cleaning"?</p>

<p>For #2 is it legal to decide any amount for unreturned keys or other items? For example could it say $100 for every unreturned key?</p>

<p>For #3 can something intangible be enforced/sued for?</p>

<h2>Contract Law</h2>

<p>A lease is a contract so let's go back to basic contract law (this is an Australian perspective; your results may differ).</p>

<p>A contract is a legally enforceable agreement. You can agree to whatever you like so long as it is legal; without getting into <em>that</em> particular patch of weeds, you can agree on terms and consequences for breaching those terms (which are, of course, simply more elaborate terms).</p>

<p>If someone breaches a term of the contract then the non-breaching party can:</p>

<ul>
<li>Waive the term on this occasion i.e. accept this breach</li>
<li>Waive the term on this occasion and in the future i.e. effectively remove the term from the contract</li>
<li>Seek an order for specific performance i.e. a court order that the breacher must comply with the contract on pain of contempt of court</li>
<li>Seek an injunction i.e. an order to <em>stop</em> the breacher doing whatever they were doing, the mirror-image of a specific performance order</li>
<li>Seek a Mareva order i.e. an order to freeze assets</li>
<li>Seek an Anton Piller order i.e. an order not to destroy evidence</li>
<li>Seek damages including for general, nominal, expectation loss, reliance loss, disappointment and distress.</li>
<li>Terminate the contract but not if the breach is of a warranty rather than a term of the contract.</li>
</ul>

<h2>Your examples</h2>

<p>Applying this to your examples:</p>

<blockquote>
  <p>no smoking in the house</p>
</blockquote>

<p>See above.</p>

<p>Practically the only damage the landlord has suffered (unless they burn the place down) is the smell of tobacco (or whatever) in the place i.e. the cost of getting it cleaned. This is unlikely to be considered a breach of a term of the contract sufficient to warrant termination. Even if this was rewritten so that eviction was a consequence, tenancy law would probably make this unenforceable.</p>

<blockquote>
  <p>$5 will be charged for any unreturned keys at end of tenancy</p>
</blockquote>

<p>You are allowed to recover damages. You are allowed to specify in the contract a genuine pre-estimate of what those damages will be. $5 looks like a genuine pre-estimate of the cost in time and money of getting new keys and would be enforceable. $100 looks like a penalty and wouldn't.</p>

<blockquote>
  <p>no noisy parties</p>
</blockquote>

<p>Where is the damage? Who suffered it? Only the person who suffered it can claim it. If the neighbours were to sue the landlord then the landlord could join the tenant as a defendant and (hopefully) rely on this clause as an indemnity.</p>

<p>It is equally likely this term would be thrown out for being undefined: what the heck is a "noisy party" and who decides? If I'm alone I can ply my stereo at 11 because its not a party? How many people have to be there before it is a party? If there are enough, how loud is noisy?</p>

<h2>Contingency thinking</h2>

<p>The contract is what the parties agreed. If the can't agree on what they agreed then someone, probably a judge, is going to have to. Since disputes are expensive it is always better to agree on as much as you can while the issues are academic rather than after they have become points of contention. Terms along the lines of "I wont do this but if I do then ..." will lead to far fewer disputes.</p>
