Rent reviews and unforeseen circumstances

Malcolm Dowden

Journal of Property Investment & Finance, 2013, vol. 31, issue 4, 390-393

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 inScottish Widowsv.BGC International [2012] EWCA Civ 607as 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: Rent; Review; Contract; Interpretation; Rectification; Intention; Rent reviews; Rental value (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jpifpp:v:31:y:2013:i:4:p:390-393

DOI: 10.1108/JPIF-03-2013-0020

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