It is not uncommon in the commercial property world for
arrangements to be made to re-schedule or change the pattern of
rent payments. When it comes to short leases and the like, a recent
Court of Appeal case has highlighted the need for care when making
those arrangements orally.
In MWB Business Exchange Centres Limited –v- Rock
Advertising Limited, the lease included one of those
'boiler plate' clauses that says that variations must be in
writing. An arrangement was made to re-schedule rent payments,
and that arrangement was made orally. Case closed
surely? No change to the lease itself?
The Court of Appeal said no. Confirming comments made in a
previous Court of Appeal case, it held that notwithstanding the
clause in the lease, the oral variation had amounted to a variation
of the lease. Why? In short, because commercial parties
are free specifically or, by conduct, to agree to vary or discharge
a contract, or indeed waive a particular provision. In this
case, that is what they had done in relation to the 'boiler
What about the statutory background, which requires leases over
a certain length to be in writing? That didn't apply here,
as it was a short term 'let', so a licence to occupy.
What about the fact that the amounts were already due, and it
was simply the case that the payments were being
rearranged? The Court held that there was sufficient benefit
to the re-arrangement to the landlord, with no implication or
duress or fraud, to amount to fresh consideration.
So should we all simply keep our mouths shut? Well, broadly yes
when it comes to making arrangements that are contrary to the terms
of the original letting. Instead, put the arrangement in
writing (or follow up in writing), and make it clear that it is
temporary, permissive, and does not vary the underlying legal
structure. If in doubt, run it past a lawyer!
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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