Back

Our offices will be closed over the Easter weekend from 5:30pm on Thursday 28 March. We will reopen as usual at 9am on Tuesday 2 April.

Get in Touch Menu

Take care when varying a lease

29 November 2016

While it is always better to record any variations to a contract or a lease in writing (and even better by deed), a recent Court of Appeal case has highlighted those verbal agreements to vary contract or lease terms can be just as effective, even where the original contract or lease itself states that any changes must be made in writing.

Renting office space

In this particular case, the tenant fell into arrears on the offices they rented. They agreed verbally with the landlord’s credit controller that they would pay a reduced rent for the first part of the tenancy and an increased rent later on when they hoped that their cash flow would have improved. Unfortunately, the landlord claimed that the credit controller did not have the authority to make the agreement, terminated the tenancy due to the arrears and locked the tenant out of the property.

The court found that the landlord’s credit controller did have sufficient authority to bind the landlord and that a valid agreement had been made and kept to by the tenant. Although the tenancy agreement contained a clause stating that any variations or additional agreements had to be in writing, this was not binding. Any clause which states that changes must be in writing will not be effective where there is clear evidence that a verbal agreement has been reached and complied with.

Powers of employers and employees

The clear lesson for landlords is to make sure that anybody negotiating with a tenant (including credit controllers dealing with arrears) is very clear as to the extent of their authority and what they can and cannot agree. Just because the employer believes that they have not given authority to an employee to agree to changes, it does not mean that a court will take the same view.

The clear lesson for tenants is that it is always best to make sure that there is clear evidence of the circumstances surrounding any unwritten agreement, such as a follow-up letter or email setting out the terms. The tenant must also stick to the terms of any verbal agreement to ensure that it is legally binding.

Speak to our commercial property team for legal advice on anything property-related. 

Contact us
Disclaimer: All legal information is correct at the time of publication but please be aware that laws may change over time. This article contains general legal information but should not be relied upon as legal advice. Please seek professional legal advice about your specific situation - contact us; we’d be delighted to help.
Contact
Chris Wills LLB (Hons)
Partner
View profile
Related services
Share this article
Resources to help

Related articles

Changes to company law – what businesses need to know

Corporate

This week, initial changes to company law – including the biggest changes to Companies House since it began – will start to take effect. Here, our corporate and commercial team…

Chris Wills LLB (Hons)
Partner

Unearthing the implicit duty of cooperation in commercial contracts

Commercial

In the world of business, contracts are the bedrock upon which deals are built. These carefully crafted documents are a testament to the mutual understanding between parties, outlining their respective…

Richard Holland BA (Hons)
Senior associate, solicitor

Why sole director companies should check articles of association

Corporate

A recent case has highlighted the importance of ensuring a company is incorporated with carefully drafted articles of association, if there is only one director. All limited companies must have…

Helen Howes LLM
Associate, solicitor
Contact us