The High Court has held that a tenant owed default interest on late payments under a lease, even though the landlord had not issued any demand for default interest. As the tenant had not made all payments due under the lease as required by the break clause, the tenant's right to break the lease had not been validly exercised. The tenant remained bound for the remainder of the lease term, despite the amount of default interest being negligible. The judge admitted that the result in this case was a "harsh one" and that the conditions attached to the break clause represented "something of a trap for a tenant. (Avocet Industrial Estates LLP v Merol Ltd and another [2011] EWHC 3422 (Ch). “

The above case illustrates the need to ensure strict compliance with all the terms of a break clause. It is also important to carefully consider the wording of a break clause before signing a lease to ensure the conditions allow the tenant to exercise the break without too much difficulty.

Please contact the Commercial Property team if you would like to discuss your rights and obligations as a landlord or tenant when dealing with break clauses.”