25/01/2016

On 2 December, the Supreme Court handed down a judgement against Marks & Spencer relating to a former lease by M&S of premises in London.

In 2011, M&S exercised a break clause to end the lease early on 24 January 2012. It should have ended in February 2018.

On 25 December 2011, as it was obliged to do, M&S paid the rent of £309,172 for the period to March 2012 in full even though the lease would end on 24 January 2012.

M&S later sought to recover that part of the rent it paid for the period after 24 January 2012 by arguing that an implied term to that effect was necessary to give effect to what the parties actually intended or to allow the lease to make commercial sense.

M&S’s claim failed.

In the absence of an express clause in the lease dealing with the rent situation, the Supreme Court refused to imply a term into the lease that M&S could recover the rent paid in advance for the period after 24 January 2012. In addition to not being able to recover that sum, M&S will be responsible for very substantial legal costs.

Commenting on the case, Gareth Wilkinson, a Partner in our Dispute Resolution team at Beswicks Legal commented that,

“this decision demonstrates the need for clear and unambiguous drafting in not only commercial leases but also commercial agreements generally. This case is of wider commercial application and may be agreed to limit implied terms in commercial contracts for reasons of necessity or business efficacy.

You should set out clearly how contractual relationship will work and review and understand them before committing. Failure to do so can lead to very unwelcome consequences”

For further advice on this topic or any dispute resolution related issue contact Gareth Wilkinson on 01782 205000 or
gareth.wilkinson@beswicks.com