Financial Times Article – “Is Email Proof of Break Clause?”

I was recently asked by the Financial Times to respond to a reader’s question about whether: “Email is proof of a break clause?”

The full question read as follows:

Twelve months ago we moved offices and signed a three-year lease with an 18-month break clause. When we signed the contract, we failed to check that the break clause was in the agreement and have now found that it is missing. We have confirmation of the break clause in e-mail exchanges before we signed with the landlord. Is this sufficient to enforce the break clause?

My response is as follows:

Normally, for a break clause in a Lease to be effective, it has to be specific as to the exact date of the break, the period of written notice required to exercise it and any conditions required.

If it is clear from the correspondence between the parties that there was to be a break clause in the Lease and the specifics of that clause are clearly stated, then the omission of the clause from the Lease itself is a mutual mistake.

Whilst the law relating to mistake is itself complicated, I consider that a Court is likely to order rectification of the Lease so as to include that break clause because it would be unconscionable on the part of the Landlord to deny that he had agreed such a clause.

You should therefore give the Notice exercising the break in accordance with the specifics referred to in the correspondence, pay the rent up to the break date, remove all your possessions and vacate the premises, leaving them clean and tidy and hand the keys back to the Landlord.  You should make the point to the Landlord that there has been a mutual mistake and if the Landlord does not accept the exercise of the break, then an appropriate application will be made to the Court for rectification.

Should you have any further Property-related questions, please contact Barry Davidson, Senior Property Partner on 0151 236 5000 or via email to his PA Allison Fox on afox@gadllp.co.uk.