Howes Percival


A clean break? What to watch out for when exercising a break clause


Marcus Carter Howes Percival


Pictured below with Employment Team Parter,


Simon DeMaid


Landlords and tenants often include break clauses within heads of terms – the commercial arrangement is that one or either party can terminate the lease and exit the property. However, conditions attached to break clauses can often mean that in reality a break clause is unworkable and the intention of the parties (i.e. that the lease can be terminated) isn’t reflected in the final document. The courts have historically taken a very


literal interpretation of break clauses and have been reluctant to get too involved in the interpretation of break conditions. They tend instead to focus on the words that are contained


within them and their normal meaning. Below are some examples of situations where break clauses didn’t quite go to plan for both landlords and tenants and our top tips on how to avoid making the same mistakes. In a recent case, a break clause stated that the


landlord could terminate the lease ‘at any time’ on two months’ notice if the tenant failed to either: commence redevelopment works within six months of the date of the lease; or complete the development before May 23, 2018. The tenant didn’t complete the works in time,


so the landlord exercised the break clause. The tenant argued that the landlord never had the right to exercise the break clause as they had completed the development by the time the landlord served the notice. Nevertheless, they argued that notice should have been served within a reasonable time, not at any time. The court found that the break notice had


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