Agreements for lease with development obligations—liquidated and ascertained damages
Agreements for lease with development obligations—liquidated and ascertained damages

The following Property guidance note provides comprehensive and up to date legal information covering:

  • Agreements for lease with development obligations—liquidated and ascertained damages
  • Quantification of LADs

If the developer fails to achieve practical completion by the target date set out in the agreement for lease, the tenant will expect to receive damages for the lost income and wasted expenditure that it suffers as a result of not being able to start trading from the premises at the anticipated time.

In some situations, the tenant will also expect to receive damages if the premises do not achieve an agreed target area.

The developer might argue that the tenant is adequately compensated, by an appropriate postponement of the rent commencement date if the target date is not achieved, or a reduction of the rent payable under the lease if the premises are too small, but this is unlikely to be acceptable to the tenant, whose ability to trade to the fullest extent anticipated has been compromised by the developer’s default.

While failure to achieve either of these criteria could be left to a common law claim for damages, the tenant can avoid the difficulty, time and expense involved in proving and assessing t

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