Avoiding the pitfalls of break notices

Break notices continue to be a contentious area in the current economic climate and are likely to continue to cause problems for the foreseeable future.

Recent decisions on this subject provide no respite for tenants and confirm the Courts’ established principle that break clauses will be construed very strictly.

In the recent case of Linpac Moulding Ltd & Others the Court considered the exercise of a break clause which was expressed to be personal to the currently tenant. The tenant with the benefit of the break clause had assigned the lease to a group company, and then looked to take a reassignment of the lease in order to exercise the break. The Court found that the right to break had terminated upon the assignment of the lease.

The 2010 Hotgroup Limited case serves as a useful reminder that a break clause needs to be considered in the context of the lease as a whole. The lease in this case provided that no notice would be validly served unless it was also copied to the managing agents appointed by the landlord. The tenant failed to copy the break notice to the managing agents before the date for service and it was therefore found to be invalid.

For further information on serving a break notice or challenging the validity of a break notice received, contact Helen Stamp.

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