The well-known chain store, Marks and Spencer (M&S) has been in the news for the wrong reasons recently.
A lawyer at City law firm Mischon de Reya said of a recent Supreme Court judgement involving M&S: 'This is not any court decision … This is the M&S break clause decision.'
Until 2012, M&S rented prestigious office space at The Point in Paddington, London. M&S exercised a break clause in the lease and paid the next rent that fell due in full despite the fact that the lease was to end only one month later. M&S also paid a break premium of £919,800.
Only after they had left did M&S try to reclaim a rent refund of £1.1m for the period of the contract after it moved out of the premises. Interestingly the first court to hear the case held that a term should be implied into the lease to allow M&S to recover the rent.
The Supreme Court found against M&S and held that it should not be permitted to reclaim the rent.
This is not a case just about M&S and expensive office premises. The case gives tenants more certainty in relation to liability to pay rent at the end of a lease but the decision could go beyond property law. The case shows what a court is prepared to imply into a contract as a matter of necessity.
If you are going to take a lease of premises it is important to ensure that you take legal advice to ensure that the terms are clearly drawn - particularly in relation to break clauses and the rent payable at the end of the lease.
To discuss this or any other commercial landlord and tenant related matter, contact us.