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The Acme Co. leased the second floor of a three-storey office building to the High Finance Company for a three-year term. The lease contained a

The Acme Co. leased the second floor of a three-storey office building to the High Finance Company for a three-year term. The lease contained a clause in which the tenant acknowledged that the building was in a good state of repair. The lease made no mention, however, of responsibility to repair subsequent damage to the rental premises. Before moving into the premises, the High Finance Company made extensive changes to the leased premises by adding several partition walls, special electrical wiring for its computer operation, and an air-conditioning system. Three months later, a fault in the electrical wiring caused a serious fire that destroyed the interior of the High Finance Company's rental premises, and caused serious damage to the third floor of the building and water damage to the first-floor tenant's equipment and merchandising business. The High Finance Company agreed to pay for the damage to the part of the premises that it had leased, but refused to pay for the general damage to the building on the basis that the landlord had agreed to the changes in the electrical wiring that had resulted in the fire. The High Finance Company also refused to pay rent for its part of the building until the premises were again fit for occupation. Discuss the rights of The Acme Co., the third-floor tenant, and the first-floor tenant. On what basis, if any, might the High Finance Company refuse to pay its rent?

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