Does the fact that this was a commercial lease negotiated by seasoned business entities, not a consumer lease between unsophisticated individuals, have any bearing in the result?

California, United States of America


The following excerpt is from Harbor Island Holdings v. Kim, 107 Cal.App.4th 790, 132 Cal.Rptr.2d 406 (Cal. App. 2003):

The fact that this was a commercial lease negotiated by seasoned business entities, not a consumer lease between unsophisticated individuals, has no bearing on the result. The court in Ridgley v. Topa Thrift & Loan Assn., supra, 17 Cal.4th 970, 73 Cal.Rptr.2d 378, 953 P.2d 484, addressed the suggestion that "a different set of rules [should] apply because [it] was an `arm's-length commercial transaction.' [Citation.]" (Id. at p. 981, fn. 5, 73 Cal. Rptr.2d 378, 953 P.2d 484.) It dispelled that notion, stating, "That [the obligors] are ... business owners rather than consumers, however, does not deprive them of

[132 Cal.Rptr.2d 412]

section 1671's protection against unreasonable penalties...." (Ibid.)

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