When you start a business, the first thing you need is a good place to run it. On that stage you may ignore some crucial legal aspects of the premises you lease which may put you in trouble if something goes wrong. It is better to know if lease contracts, even for a fixed term, may be terminated in advance.
Under Polish law, a lease contract may be a fixed-term or for an infinite period. In usual business practice, the term is fixed and is between 2 and 10 years. The term may be also established by some future event certain to occur.
If the contractual term is fixed, the contract may be terminated earlier only in cases named in the contract. However, that does not mean that if there is no such stipulation, the lessee would be always forced to pay for the whole term even if he chooses to wind up his business and leave the premises.
If the lessee informs the lessor that he will not continue the lease and returns the premises, the lessor should not wait until the time the tenancy expires and demand the rent for the whole term. To the contrary – he should call upon the lessee to use of the premises in accordance with the contract and, if that does not happen, terminate it. That does not mean that sole return of premises is sufficient to terminate the lease.
If the lessor would wait too long with termination of the lease, the court may interpret it as an abuse of rights and regard it as contrary to good faith. That was decided recently by Warsaw Court of Appeals. In that case, only the lessor could terminate a fixed-term contract before its expiration and the lessee was obliged to pay for up to additional 6 months from the day of termination, until a new tenant would be found.
The lessee, when his financial situation deteriorated, informed the lessor that he would empty and return the premises. The lessor accepted the premises back, but not earlier than after 3 months he demanded the lessee to return to use the premises as per contract. The following month the lessor terminated the contract and demanded the rent for the whole period plus additional 6 months and a penalty fee.
The Court of Appeals found such behaviour as ‘disloyal’ and stated that in the light of the communication between the parties the lessor should have known that the lessee would not use the premises again and should have terminated the lease contract earlier.
This and other cases show that it is advised to carefully draft a lease contract with taking into account possibilities of termination for both parties and to point out particular situations when it would be possible. One shall have a plan both for success and for a necessity to change location of the business before the lease elapses
Back to list
March 30, 2020
Una de las partes más importantes para lograr un acuerdo exitoso es llevar a cabo una debida diligencia exitosa. ¿Qué es...Read more
March 26, 2020
Beyond the health and social implications of COVID-19, the virus presents a range of business risks including closures, cancellations, supply...Read more
March 23, 2020
Lo primero que debe hacer es preguntarse cuál es la mejor estructura legal para su operación en Polonia. Probablemente necesite...Read more