Breaking a lease because of External factors
Can I Break My Lease Due to External Factors Such as a Pandemic?
Lease agreements are binding legal contracts that define the rights and responsibilities of both landlords and tenants. In the wake of unpredictable global events, such as a pandemic, tenants might find themselves in a situation where they wish to break a lease. This article delves into whether it's possible to break a lease due to external factors like a pandemic and explores the legal nuances that govern such scenarios.
How to Legally Break a Commercial Lease Agreement?
1. Review Your Lease Terms
- Every lease is unique, and the specific terms might provide clauses that allow for termination under certain circumstances.
- A thorough review with legal counsel can unveil options that align with your situation.
2. Negotiate with Your Landlord
- Open dialogue with your landlord may lead to a mutual agreement.
- A negotiated settlement can minimize legal disputes and financial burdens.
3. Seek Legal Advice
- Engaging a legal professional will provide tailored advice for your situation.
- An attorney specializing in real estate law can navigate the complexities of your lease.
What Does "Force Majeure" Mean?
"Force Majeure" is a legal term derived from French, meaning "superior force." In legal contexts, it refers to unforeseeable and unavoidable circumstances that prevent one or both parties from fulfilling a contract.
Applications in Lease Agreements
- Force majeure clauses are often found in commercial contracts, including leases.
- This clause can excuse a party from liability if certain unexpected external events occur, rendering performance impossible or impractical.
- Courts often interpret force majeure clauses narrowly, and the specific wording is crucial.
- It requires clear evidence that the external event was indeed unforeseeable and beyond the party's control.
Is There a "Force Majeure" Clause in Your Lease Agreement That Could Apply in a Pandemic?
Evaluating the Clause
- A lease may include a force majeure clause that lists specific events, like natural disasters, war, or even pandemics.
- The ability to invoke this clause depends on the exact language and how courts in your jurisdiction have interpreted similar clauses.
Case Study: A Restaurant During a Pandemic
- A restaurant owner faced mandatory closures due to a global pandemic. The lease contained a force majeure clause, including pandemics as an example.
- With legal assistance, the tenant was able to invoke the clause and negotiate a temporary reduction in rent, demonstrating the practical application of force majeure in a real-world scenario.
Other Legal Considerations
Frustration of Purpose
- If a force majeure clause does not exist or apply, the legal doctrine of "frustration of purpose" may be relevant.
- This can apply if an unforeseen event undermines the fundamental purpose of the contract, and neither party is at fault.
Business Interruption Insurance
- Depending on the insurance policy, business interruption insurance might provide relief if external factors have affected your ability to conduct business.
Conclusion: Navigating Unforeseen Challenges
Breaking a commercial lease due to external factors like a pandemic is not straightforward and hinges on various legal aspects, including specific lease terms, negotiation with the landlord, applicable laws, and potentially, the force majeure clause.
The concept of force majeure provides a legal pathway for addressing unforeseen and uncontrollable events, but its applicability requires careful examination of the lease agreement and likely professional legal guidance.
Whether you're a landlord or tenant, understanding these concepts and seeking professional assistance can help you navigate the complex landscape of commercial real estate in the face of unprecedented challenges. Collaboration, open communication, and a clear understanding of legal rights and responsibilities can turn a seemingly insurmountable obstacle into a manageable situation.