When taking a lease it always pays to have a proper solicitors go over it. Failing to do so could cause misery and hardship later on down the line. legal jargon can often be extremely confusing so always have a fully trained legal professional go over everything with a fine toothcomb.
It is typical that where a lease is sublet or where the lease is to a business, a guarantee arrangement will be placed whereby the former tenant or a director of the lessee company guarantees performance of the lease. If the tenant fails to pay the rent, the landlord can then seek to recover the unpaid rent from the guarantor. A recent case looked at the situation arising when a landlord requested payment of rent from the director of a tenant company when the tenant failed to pay an amount in excess of eleven thousand pounds.
The landlord served a statutory demand on the director guarantor, the effect of which, if left undefeated, would be that the director could be made bankrupt if payment were not made inside 28 days. Although the lease required the tenant to pay the rent ‘without deduction or set off’, the director applied to the court to have the demand set aside on the ground that the company tenant had a failsafe counterclaim against the landlord.
The rules relating to statutory demands list a counterclaim as one of the reasons a statutory demand can be defended. However, the guarantor didn't that the court should use its discretion to set aside the statutory demand, because it was unfair that he should face bankruptcy in these circumstances. The court agreed, because the wording of the guarantee wasn't for the director to pay the rent: it was for the director to ensure the tenant discharged their obligations and to make good any shortfalls. If the wording of the guarantee been different, the result could well of been different too.
Time and time again people get caught out by contracts that ultimately are not worth the paper they are printed on. Always get a third party, preferably a trained legal professional, to go over it. It may be a cliche but always read the small print! A well written contract is designed to protect both parties, unambiguously and without bias. It is paramount for the grounds of any good business. Always pay extra notice to extra clauses and addendums that may be placed on the bottom in the hope that you are fed up by the time you reach it and fail to read them adequately!
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