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Rent suspension

In this article John Martin sets out some of the practical points that are relevant to rent suspension clauses.


Introduction

Rent suspension provisions (including provisions for abatement where that is appropriate) generally require careful thought. In the absence of any express provision in the lease to the contrary, rent remains payable even though the buildings comprised within the demised premises cannot be used because of damage by fire or other catastrophe. (The House of Lords decided in National Carriers Limited v Panalpina (Northern) Limited [1981] AC 675 that while the doctrine of frustration can apply to leases, it will “hardly ever” apply. One possible example of where it might, they suggested, was in the case of coastal erosion.)

No term for suspension or abatement of rent will be implied, even where the tenant has re-imbursed the cost of insurance against loss of rent. (See, for instance, Cleveland Shoe Co Limited v Murray’s Book Sales (King’s Cross) Limited (1973) 229 EG 1465.)

It is vital, therefore, from the tenant’s point of view that a rent suspension clause appears in the lease, and that it operates whenever the demised premises become unfit for use in whole or part because they have sustained damage. “Suspension” here means suspension of liability rather than suspension of payment alone.

Uninsured risks

The vexed question for landlords and tenants at the moment is whether rent suspension should apply where the demised premises are damaged by an uninsured risk. (The Code for Leasing Business Premises in England and Wales provides that it should, unless the damage is caused by a deliberate act of the tenant.) Similarly, should any related break right enjoyed by the tenant also apply in such a case? Inevitably, this will continue to be a matter for commercial negotiation.

Landlord

These are points for landlords:
  • Rent abatement should obviously be conditiona ... THIS IS AN EXTRACT OF THE FULL TEXT. TO GET THE FULL TEXT, SEE BELOW

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