Commercial Lease in UK Law

In determining the meaning of the language of a commercial contract, and unilateral contractual notices, the law therefore generally favours a commercially sensible construction. The reason for this approach is that a commercial construction is more likely to give effect to the intention of the parties. Words are therefore interpreted in the way in which a reasonable commercial person would construe them.

If one approaches the question by reference to what the parties would have agreed, one is not strictly concerned with the hypothetical answer of the actual parties, but with that of notional reasonable people in the position of the parties at the time at which they were contracting. Secondly, a term should not be implied into a detailed commercial contract merely because it appears fair or merely because one considers that the parties would have agreed it if it had been suggested to them.

Counsel for the claimants sought to persuade us, in their written and oral submissions, that there was at least arguably still scope for the Ramsay principle to operate, with the consequence that the actions should not be struck out and there should be a full investigation of the facts at trial after the parties had fully pleaded their respective cases and disclosure had taken place.

So upon the question of principle which these two appeals were brought to settle, I would hold that in the absence of any contra-indications in the express words of the lease or in the interrelation of the rent review clause itself and other clauses or in the surrounding circumstances the presumption is that the time-table specified in a rent review clause for completion of the various steps for determining the rent payable in respect of the period following the review date is not of the essence of the contract.

However, where a rent review clause is associated with a true option (a "break" clause, for example), it is a strong indication that time is intended to be of the essence of the rent review clause—if not absolutely, at least to the extent that the tenant will reasonably expect to know what new rent he will have to pay before the time comes for him to elect whether to terminate or renew the tenancy (cf. Samuel Properties Ltd. v. Hayek [1972] 1 W.L.R. 1296).

Such significant inroads into the Tenant's right to enjoy the Premises free from interference is not a result it seems to me that the parties would have contemplated when executing the Lease. If such had been the intention of the parties to a commercial lease, one would expect to find much clearer words or indication to that effect within it.

Quite apart from raising abstruse issues as to who is the proferens (and, in particular, whether the issue turns on the precise facts of the case or hypothetical analysis), "rules" of interpretation such as contra proferentem are rarely decisive as to the meaning of any provisions of a commercial contract. The words used, commercial sense, and the documentary and factual context, are, and should be, normally enough to determine the meaning of a contractual provision.