WEBINAR April 2020 “When you have no basis for an argument, abuse the Plaintiff” – Cicero, eminent Roman jurist
Logistics ▪ Please keep your microphone muted and video off for the duration of the webinar ▪ Please ask questions as we go along using the comments tab – I prefer an interactive approach as much as possible ▪ If you see my face turn or eyes drift – I am using dual monitors, and my presentation is on the second screen
Overview: Session 1 ▪ General principles of leases ▪ Offers to lease & effect of rejections of amendments ▪ Most important lease clauses - * Part 1
Overview: Session 2 ▪ Most important lease clauses * Part 2 ▪ Deeds of Suretyship ▪ Penalties ▪ Disclaimer Boards
DISCLAIMER!
Common Questions ▪ A lease has to be in writing to be valid FALSE ▪ A lease has to be signed in black ink to be valid FALSE ▪ The suretyship must be in writing to be valid TRUE ▪ All the pages of the lease have to be initialled to be valid FALSE ▪ Any amendments to the lease must be in writing to be valid TRUE, DEPENDING…
General Principles: Essentials ▪ Essentials of a lease: ▪ Landlord ▪ Tenant ▪ Premises ▪ Rental amount ▪ Forms: ▪ Written ▪ Oral ▪ Tacit
Offer to lease - Principles ▪ Basic principles of law of contract: offer and acceptance ▪ OtL to contain all the terms agreed upon ▪ Revocable before acceptance ▪ Acceptance of OTL by landlord – communication ▪ Counter-offer
Case 1: Counter-offer
Case 1: Counter-Offer 1/2
Case 1: Counter-Offer 2/2 ▪ No written lease – no meeting of the minds! ▪ Partly written, partly tacit lease – took occupation and paid rent initially ▪ Terms: those uncontested terms of the OtL
Supervening Impossibility 1/3 ▪ Permanent supervening impossibility ▪ Generally brings the contract to an end ▪ The law will not expect a person to perform the impossible ▪ Reciprocal obligation also terminated ▪ Legal impossibility is a form of supervening impossibility ▪ Peters Flamman & Co v Kokstad Municipality 1919 AD 427 ▪ Business wound-up by order of Government as the partners were interned as enemy subjects ▪ Due to the Government order, it became impossible for the partnership to carry out the contract ▪ Partnership was discharged from liability and could not be held liable for damages
Supervening Impossibility 2/3 ▪ Temporary supervening impossibility ▪ Performance suspended for period of impossibility ▪ Provided it is possible to continue once impossibility ends ▪ Counter-performance similarly suspended
Supervening Impossibility 3/3 ▪ Person relying on temporary impossibility has to prove: ▪ Did not have benefit of performance by the other for the full period of non- payment ▪ That the occurrence giving rise was unforeseen and uncontrollable ▪ That the event relied on was the direct cause of the inability to perform ▪ Transnet Ltd t/a National Ports Authority v Owner of MV Snow Crystal 2008 (4) SA 111 SCA ▪ Supervening impossibility will not necessarily excuse performance ▪ Difficulty, inconvenience or even hardship does not equate to impossibility ▪ Has to consider: ▪ The nature of the contract ▪ The relation of the parties ▪ The circumstances of the case ▪ The nature of the impossibility
Case 2: Supervening Impossibility
Case 2: Supervening Impossibility World Leisure Holidays (Pty) Ltd v Georges 2002 5 SA 531 (W)
Case 2: Supervening Impossibility
Impossibility - Conclusion ▪ What are the respective obligations due by the parties? ▪ Landlord ▪ Delivery of premises ▪ Maintenance of the building ▪ Undisturbed use and enjoyment ▪ Other, as per lease ▪ Tenant ▪ Payment of rent ▪ Use and care of the property ▪ Return of property in same state ▪ Other, as per lease, e.g. continuous trading ▪ What has actually been rendered impossible during lockdown?
Most Important Lease Clauses 1/19 “The centre will be occupied by at least 75% of tenants (excluding the Tenant) (stocked, staffed and trading) on the lease commencement date and will remain so for the entire duration of the tenant’s lease and option periods. Should occupancy fall below 75%, the tenant will give notice to the landlord to remedy such and will be entitled to a pro-rata rent reduction on the same percentage as the vacancy below 75%. Should the vacancy remain below 75% three months after notice to the landlord, the tenant shall be entitled to cancel the lease agreement by giving one month’s written notice. In the event of such cancellation, the landlord will have no claim against the tenant for damages. ”
Most Important Lease Clauses 2/19 “The Tenant shall, and it is a material term of this agreement, keep the leased premises open continuously during business hours and carry on its business during the whole term of its agreement or any extension or renewal thereof, with its full range of merchandise, subject to its right to close the leased premises on special occasions or when general conditions render it reasonably appropriate to do so, with the written consent of the Landlord. The Tenant agrees to the minimum business hours as set out in clause 10 of the schedule. ”
Most Important Lease Clauses 3/19 ▪ “ The Tenant shall pay the gross rental for the first calendar month of this lease on commencement date of the Lease and thereafter monthly in advance so as to reflect as cleared and available funds, on the first day (1 st ) of each calendar month for the remainder of the lease period, at the address set out in clause 9 of the Schedule or at such other address as the Landlord may notify to the Tenant, from time to time. ” 3 rd most important clause in the lease! ▪ ▪ Venter v Venter 1949 1 SA 768 (A) – bank error ▪ Mohamed’s Leisure Holdings (Pty) Ltd v Southern Sun Hotel Interests (Pty) Ltd 2017 ZASCA 176 ▪ “The privity and sanctity of contract entails that contractual obligations must be honoured when the parties have entered into the contractual agreement freely and voluntarily.” ▪ Even if the clause operates harshly – the parties freely concluded the lease
Most Important Lease Clauses 4/19 ▪ “ The gross rental and other payments payable by the Tenant in terms of this lease shall be made without demand, free of exchange and without any deduction or set-off whatsoever. ” ▪ Most important clause in the lease! ▪ Reciprocity of obligations ▪ Exceptio non adimpleti contractus
Most Important Lease Clauses 5/19 ▪ “ The Tenant shall, on demand, pay its pro rata share of municipal rates and taxes payable on the property. The Tenant shall be liable for its pro rata share of any new tax or levy introduced by any local or other authority in respect of and/or relating to the leased premises, building, property, or signage erected thereon. ” ▪ If the tenant fails to pay the rates, the municipality cannot recover it from the tenant, as there is no legal link between the municipality and the tenant.
Most Important Lease Clauses 6/19 ▪ “ Failure to pay in terms hereof within seven (7) days of the Tenant receiving the notice or invoice, shall entitle the Landlord to discontinue the service, apart from its other rights in terms of this agreement. In such event the Landlord shall not be responsible for any damages direct or consequential. Failure to pay the outstanding amount stipulated in the notice or invoice will also constitute a breach as envisaged in clause 20 and the Landlord may exercise any of its rights pursuant thereto. ” ▪ Right to disconnect? ▪ Cancellation?
Most Important Lease Clauses 7/19 ▪ “ In the event of any interruption of any services or facilities or common services or facilities, or should any such services and conveniences or equipment become unusable, the Tenant shall not be entitled to a reduction of the monthly rental payable in terms of this agreement of lease, or withhold or defer payment of the monthly rental of have any claim of whatsoever nature against the Landlord or its agents, and the Tenant may furthermore not cancel this agreement of lease. ”
Most Important Lease Clauses 8/19 ▪ “ The Tenant acknowledges that the Landlord does not warrant that the leased premises are suitable for the purpose of the Tenant’s business, nor that it will be granted any license or consent in respect of its business, or that such license or consent will be renewed or extended. ”
Most Important Lease Clauses 9/19 ▪ “ The Tenant shall comply with and not contravene or permit the contravention of all applicable laws, by-laws and regulations (which regulations shall without limiting the generality thereof include the national building regulations and SABS codes), especially, but not limited to, those relating to the Tenants or occupiers of business premises or the conduct of any business carried on in the premises. The Tenant shall not contravene or permit the contravention of any of the conditions of title under which the property is held by the Landlord or any of the provisions of the town planning scheme applicable to the property. Nothing in this clause shall entitle any Tenant or person to oblige the Landlord to take action in terms of the subclause, nor shall any Tenant or occupier derive any rights for the provisions of this clause. ”
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