Leases

How do break clauses in commercial leases work?

Many commercial leases contain a “break clause” allowing either the tenant or the landlord to end the lease early under certain circumstances. There are normally various conditions included in a break clause, including specific dates on which the tenancy can be ended early and a requirement for the party breaking the lease early to compensate the other.

Break clauses can be a good idea, especially with longer leases, as they give you a way out of a lease if your priorities change e.g. a particular location you are leasing is unprofitable for your business, or you wish to sell a property that you are leasing and need the tenant to leave.

What is an “implied term” in a commercial lease?

Sometimes when there is a dispute over a commercial lease, one of the parties involved in the dispute may seek to rely on an “implied term” of the lease. This means something that they consider to be intended as part of the lease, even though it is not specifically written into the document.

The exact definition of what can be considered an implied term is complicated, but in very general terms it is something that a reasonable person, on reading the lease, would consider to be obviously intended by the parties signing it.

This kind of ambiguity can often lead to protracted and expensive disputes. This is why is it so essential to have any commercial lease, or other commercial property contract, carefully reviewed by an experienced solicitor, so they can ensure that any such areas of potential confusion are cleared up.