A supply agreement will guide you through your rights as a tenant and what is involved in your tenancy. It defines the meaning of words such as ‘Tenant’, ‘Lease’, ‘Title’. They might seem obvious to you, if you are not well acquainted with the implications of a word in legal terms. You’d think that ‘Tenant’ just means the person taking up tenancy and liable for rent. But a supplier agreement will likely define ‘Tenant’ to include successors in title and liability.
It’s actually normal and quite common not to think about the worse – accidents that need hospitalization, loss of consciousness for a significant time, death. Also, insolvency and bankruptcy or failing to pay the rent over a period of time. If anything happens to the tenant, rendering them incapable of running the business, the successors will be liable. So the wise course of action would be, in case of an eventuality, to make provisions for your successors.
In a supply agreement, you will likely read the following in a clause: “Except where the context renders it absurd or impossible every reference to any party to this Lease shall include his or her successors in the title and personal representatives, by and against whom this Lease shall be enforceable as if they had been originally named as parties.” This means that if something happens to you, your successors will be responsible for the lease.
You need to think about your successors and how they will be liable, if you cannot pay rent for any reason or fail to comply with your assigns. Your successors should be aware of their liability, should anything happen. Also, there’s the possibility of omitting successors in the lease. Discuss this with your lawyer initially for some legal and sound advice, then consider asking your landlord to change the difinition of ‘Tenant’ and ‘Title’, so that it doesn’t include successors.
If you have any concerns with a lease, please give us a call for a no commitment initial discussion. We’re property solicitors with extensive experience in business law and commercial leasing. SG
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