Jones operated a gas station, which he leased from Amoco Oil Company under a franchise agreement. The lease was a standard form signed by Jones to obtain the franchise. The lease required Jones to return the premises in substantially the same condition as received, less ordinary wear and tear, and required him to perform necessary upkeep and maintenance on the premises, including clearing sidewalks. Although the lease did not indicate which party was responsible for fire insurance, it did note that Amoco could terminate the lease upon destruction of the premises. Early one morning a no-fault fire broke out, gutting parts of the station and causing $118,850 in damage. After the fire, Amoco terminated the lease and leveled the station. Amoco then sued Jones for not returning the station in substantially the same condition as he received it.

CASE QUESTIONS

1. Does Jones have an obligation to rebuild the gas station? Why or why not?

2. Why would Amoco terminate the lease?