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Break clauses – an interesting lesson – tenants beware!

It is relatively common for tenants to negotiate the inclusion of a break provision in a commercial lease, enabling them to terminate the lease early.  It is also relatively common for such clauses to provide that the break will only be effective if the tenant has paid all sums due to the landlord by the break date.

That seems a relatively straightforward requirement.  However, as the tenant in the recent case of Avocet Industrial Estates LLP v Merol Limited and Tudor Rose International Limited [2011]EWHC 3422 (Ch) has found to its cost, that is not necessarily so.

Under the terms of the lease, interest was payable at 4% p.a. above NatWest base rate on any sums which were not duly paid, from the date the payment was due until the date of payment. More…