Break clauses—conditions precedent
Break clauses—conditions precedent

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

  • Break clauses—conditions precedent
  • 'Reasonable' compliance
  • Material compliance
  • Absolute compliance
  • Does the landlord have to respond to the tenant’s enquiries about its compliance?
  • Estoppel
  • Common conditions and pitfalls
  • Compromise agreement
  • Negligence

A tenant's right to break is often conditional on compliance with covenants. The extent to which those conditions must be satisfied depends on whether they are absolute or qualified (eg by words such as ‘reasonable’, ‘material’ or substantial’). If conditions are not fulfilled, the break clause may not operate and the lease could then continue for the remainder of the term or at least until the next break date.

In Sirhowy, a break right permitted the tenant to terminate the lease if the local authority objected to the user. The local authority objected and the tenant purported to break. Unfortunately the break was conditional on absolute compliance with the lease covenants. The court decided the break was invalid as the tenant was in breach of the repairing covenant in failing to repair a fence. One minor breach—none of the other breaches alleged by the landlord was proved—cost the tenant £70,000.

The Code of Practice for Leasing Business Premises in England and Wales 2007 states that the only pre-conditions to tenants exercising any break clauses should be that they are up to date with the main rent, give up occupation and leave behind no continuing subleases (sometimes referred to as underleases) and that disputes about the state of the premises, or what has been left behind or removed, should be settled later (as with