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LAWS10177 Commercial Leases Week 10 termination
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LAWS10177 Commercial Leases Week 10 termination
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**Gyle shopping centre v marks and spencer’s plc- 2016 CSIH 19; discusses consent not to beunreasonably withheld. Similar to the burger king case- Lord Tyer look at his judgement. The
decision was reclaimed. Use of commercial common sense as a part of the interpretation of the
lease.
Article- SLT- in relation to @sipp case- repairing obligations (have a look at it)
Termination of leases
Commercial considerations when drafting break clauses:
Does the break relate to one party or both i.e. can both parties or only a single party exercise
the break clause option? This will always be dependent upon the instructions of the client.
Landlord can use the break clause to get a more favourable tenant to- it could be because of
an event out with the tenant landlord relation like the landlord wanting to redevelop the
property.
Use of back- letter for the break clause- granted to a specific tenant and to ensure that
successor tenants if any cannot exercise that option. This is also to ensure that the
hypothetical lease upon renewal does not assume the clauses and obligations of the original
lease
Relation with rent review and break clauses- from the landlords perspective- the break
option should be before the review date to ensure that if the review is not favourable for
the tenant then, the tenant cannot exercise the break option and vice versa for the tenant.
Tenant pays stamp duty and the level of the duty is dependent on the duration of the lease
Freedom to exercise or conditional- *Arlington Business Parks (GP) Ltd v Scottish &
Newcastle Ltd- tenant break option conditional the tenant was not in breach of their
repairing obligations- the tenant was in breach of the repairing obligation- A tenant (T)
leased office premises under two separate lease agreements with a landlord (L). A clause in
each lease stated that it could be broken as at 7 May 2013 upon 12 months' notice from T,
provided that T was not in breach of any of its obligations under the lease at the date of
service of such notice and/or the termination date. T served notices in respect of both leases
on 3 May 2012, but before it had performed its repairing obligations thereunder. Case put
out by order.. (1) T was wrong as to the construction of the phrase "and/or", and the natural
meaning of the words used was that a notice was invalid if T was in breach at the date of the
notice, or the date of termination, or both. (2) The leases did not demonstrate an intention
to draw a distinction between a breach of T's obligations and non-observance or non-
performance of their obligations. (3) There was an admitted failure by T to comply with the
repair and maintenance obligations in the lease, and this disentitled it from relying on the
notices served in May 2012. If T failed to perform its repairing obligations under the lease, it
was in breach of its obligations, and it would require clear wording before the break clause
was to be construed in a more restrictive sense. (4) The proper construction of the break
clause required T to be in compliance with its obligations as at the date of the notice, the
commercial purpose was to give L reassurance that, come the termination date, the
property would be in a proper condition, thereby allowing marketing of the subjects during
the 12 month notice period. (5) L was entitled to declarators in terms of their conclusions to
the effect that both leases remained in full force and effect, and it followed that T was liable
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