The power of the spoken word… to vary a lease

It is not uncommon in the commercial property world for arrangements to be made to re-schedule or change the pattern of rent payments. When it comes to short leases and the like, a recent Court of Appeal case has highlighted the need for care when making those arrangements orally.

In MWB Business Exchange Centres Limited –v- Rock Advertising Limited, the lease included one of those ‘boiler plate’ clauses that says that variations must be in writing. An arrangement was made to re-schedule rent payments, and that arrangement was made orally. Case closed surely? No change to the lease itself?

The Court of Appeal said no. Confirming comments made in a previous Court of Appeal case, it held that notwithstanding the clause in the lease, the oral variation had amounted to a variation of the lease. Why?  In short, because commercial parties are free specifically or, by conduct, to agree to vary or discharge a contract, or indeed waive a particular provision.  In this case, that is what they had done in relation to the ‘boiler plate’ clause.

What about the statutory background, which requires leases over a certain length to be in writing? That didn’t apply here, as it was a short term ‘let’, so a licence to occupy.

What about the fact that the amounts were already due, and it was simply the case that the payments were being rearranged? The Court held that there was sufficient benefit to the re-arrangement to the landlord, with no implication or duress or fraud, to amount to fresh consideration.

So should we all simply keep our mouths shut? Well, broadly yes when it comes to making arrangements that are contrary to the terms of the original letting. Instead, put the arrangement in writing (or follow up in writing), and make it clear that it is temporary, permissive, and does not vary the underlying legal structure. If in doubt, run it past a lawyer!

This guide is for general information and interest only and should not be relied upon as providing specific legal advice. If you require any further information about the issues raised in this article please contact the author or call 0207 404 0606 and ask to speak to your usual Goodman Derrick contact.