Rent reviews and unforeseen circumstances
Abstract
Purpose
This paper aims to examine the English court's approach to the interpretation of rent review provisions in circumstances where the words used by the parties may produce a commercially unforeseen or undesirable result. It emphasises that, while the court has wide discretion to adopt a purposive approach, and to interpret an agreement in a way that produces a result in accordance with “business common sense”, there must first be some ambiguity in the wording. The court cannot rewrite a contract where the parties simply failed to foresee or to provide for unexpected market conditions (here, a “double‐dip” fall in rental values).
Design/methodology/approach
The paper examines the Court of Appeal ruling in Scottish Widows v. BGC International [2012] EWCA Civ 607 as an example of the limits of the court's ability to arrive at commercially sensible results through purposive interpretation.
Findings
It concludes that where a clause has been drafted by experienced and skilled solicitors, the court is unlikely to intervene unless it is clear that there is a mistake in the language or syntax. The court will not rewrite an agreement where the parties did not anticipate adverse market factors.
Practical implications
The paper identifies the key factors taken into account when the court is considering either interpretation or rectification of a clause that has produced a commercially undesirable result. It also discusses the extent to which pre‐contractual negotiations may be relevant to interpretation or rectification of a contract.
Originality/value
The paper sets out the author's reading as a commercial real estate practitioner of key judicial dicta on the interpretation and effect of rent provisions.
Keywords
Citation
Dowden, M. (2013), "Rent reviews and unforeseen circumstances", Journal of Property Investment & Finance, Vol. 31 No. 4, pp. 390-393. https://doi.org/10.1108/JPIF-03-2013-0020
Publisher
:Emerald Group Publishing Limited
Copyright © 2013, Emerald Group Publishing Limited