Commercial Lease in UK Law

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. And the standard of the reasonable commercial person is hostile to technical interpretations and undue emphasis on niceties of language.

If the clause had said that the notice had to be on blue paper, it would have been no good serving a notice on pink paper, however clear it might have been that the tenant wanted to terminate the lease. But the condition in clause 7(13) related solely to the meaning which the notice had to communicate to the landlord. If compliance had to be judged by applying the ordinary techniques for interpreting communications, there was strict compliance.

Applying this logic, Mr Nugee submits that a lease, unlike an ordinary commercial contract, creates an interest in land, which may last many years and be owned in different forms by many different parties. It is addressed not merely to the original landlord and tenant, but also to their successors in title, their undertenants, their chargees and so on. Accordingly, what matters is the background material reasonably available to this disparate group of people.

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.

(3) The law does not purport to bring parties into a relationship of contractual obligation which they themselves have failed to create. This is the true ground of decision in those cases where a stipulation as to time is contained in an option.

The difference between possession and occupation is rather technical, and, even to those experienced in property law, often rather elusive and hard to grasp. Nonetheless, it is very well established, and is particularly important, and indeed well known, in the field of landlord and tenant law, especially in relation to the question of whether an agreement creates a tenancy or a licence, and in relation to alienation covenants such as clause 4.18.