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To break or not to break?

13 October 2011

Have you entered into an agreement for lease which is conditional upon the landowner/developer satisfying certain conditions, (such as obtaining planning, carrying out works etc), by a specified end date? Did the agreement also allow both parties to terminate if the conditions weren’t satisfied by this end date?

In these challenging times, it’s useful to remember the old adage that a party cannot benefit from its own breach. Recent case law upheld a prospective tenant’s argument that a developer could not terminate the agreement where it was in breach of its own reasonable endeavours obligations, despite this not being expressly set out in the drafting…so check the wording carefully (and of any exclusions) if you find yourselves unhappily on the wrong end of a termination notice. Footnote – we’ll have to see how this decision goes on appeal. We’ll keep you posted!

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