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If you need the flexibility to break your business lease; or if you believe you have a break clause in your lease and would like to use it, understanding more about the realities of break clauses could just save you enough to be able to take that cruise or dine out every weekend for a year.

A bit about break clauses:

For the purpose of this article, a break clause enables a tenant to end the lease and leave early, as if it were the expiry of the full term. They have become common, even ‘normal’ as the level of certainty in everyone’s markets has diminished. Do you know what your business will look like in three or five years, let alone in ten years’ time?

However, conditions placed on the operation of a break clause can have a catastrophic effect on the ability of a tenant to exercise the option

How conditions affect break clauses

A landlord concedes a break clause to entice a tenant to take a lease but is allowed to add ‘conditions’. The effect is that what is given with one hand is taken away with the other.

The tenant may have made compromises like accepting a shorter rent free period or paying a higher rent in the belief he has secured a break opportunity. In fact there is only cost and disappointment to come, not a break.

This is because any condition will be strictly interpreted and if not fulfilled, enables the landlord to refuse to accept notice. The lease is not broken but continues to the end. There are dozens of court reports of failed litigation by tenants seeking judgment in their favour when a landlord refuses to accept a break has been validly operated.

Conditions include the requirement to give vacant possession, to maintain the property or even to pay the rent. None is necessary to activate the clause save perhaps, for providing reasonable notice of the intention to break.

At first sight, you might say “well fair enough, the landlord doesn’t want to let the tenant off if there is a breach of a lease clause”.

Conditions relating to lease clauses are all unnecessary because, by definition they are already in the lease along with another clause saying you can’t escape from a breach at expiry.

Don’t be caught out with a conditional break clause in your lease. Ensure, preferably at “Heads of Terms” stage, that it is worded in the simplest terms without conditions whose purpose is nothing more or less than to stop you from operating that break clause.

In the world of networking, there are hunters and there are farmers.

Hunters go to an event armed with leaflets and their elevator pitch with one objective: to sell, sell, sell.

They will ram raid groups of people, hijacking conversations and talk, talk, talk.

If they have a simple low-cost offering, they may claim some success. If they can make sales they may come away thinking their time was well spent and of course, at one level it was – at least for them.

That, however, is not networking… it is selling.

Let’s look at what has really happened and then at the farmer’s approach.

The hunter is out for as many sales as possible in as short a time. Along the way, he will alienate people, be shunned by others and avoided by the rest.

Networking is about forming, building and developing relationships. It is about knowing, liking and trusting. It is about being able to identify the sort of business your network members are seeking and making a referral – putting the requirement with the provider.

So what about farmers? Well, they are networkers really but they prepare their networking ground, sow seeds of business relationships, nurture those relationships and reap rewards through referrals.

They are in the room, talking, yes but also listening. Listening to what others are saying, looking for common ground, finding connections and getting to know.

Not everyone the farmers meet will become a member of their networks. Sometimes the relationship doesn’t get beyond the ‘know’ stage. That is not to say that a referral cannot result.

The farmers will keep moving around the room and metaphorically, ‘touch’ as many people as possible. Renewing and reminding those they already know and meeting as many new people as they can. They don’t get stuck in one group; they don’t stay with people they already know. They give and ask for business cards.

The farmers may leave the meeting having not met anyone who would buy from them and yet knowing the time was well spent. How?

Because all of the people they met will in time hear the need which the farmers business can answer and make that referral.

If the farmer met 15 people at that event who each have 200 people in their network, that is 3000 potential customers for the farmer’s business. That is a lot more than the hunter can hope to get from that meeting.

If I had as many pounds as times I have heard that said…

When you have worked in any business sector long enough, you have a mental list of things you hear told or said, time and time again. For me, one such saying is: “Oh! It’s OK. My landlord is really friendly. He is very fair. He wouldn’t stitch me up. We have a really good relationship”.

The subtext is: I don’t need to bother too much about the actual lease terms I sign up to because we are best mates and he won’t apply those nasty terms to me.”

Of course, when this statement is made to stand up on its own, it is almost too obvious to mention, that the speaker is making a massive mistake or, at the very least, taking a huge commercial risk on behalf of the company he owns or is employed by.

The truth, obvious as it may be to others, is that not even the most benevolent landlord is going to put a lease together and then compromise the performance of its own investment to fortify a friendship.

The harsher and less predictable truth is that our benevolent landlord may choose to sell his investment one day. It is then prudent to assume that the new owner will apply and interpret the terms of any lease as rigorously and fully as the law allows.

A few hours and £s judiciously spent, before the lease is signed, learning and understanding the full meaning and implications of the words in a lease, will improve everything.

The landlord and tenant relationship will be more balanced and the business owner will know what his liabilities, duties and costs are going to be, from start to finish. If there should be a dispute, our prudent business owner will know his strengths (and let’s be realistic) his weaknesses in the argument to follow.