Introducing the Santa Claus(e)…

Image of Santa looking shocked to go with Santa Clause Commercial Property post.

I’ve yet to meet a lawyer with a crystal ball but a large part of our job is to try and mitigate the effects of reasonably foreseeable problems.

It’s no big secret that for adults and businesses, Christmas can be stressful and frantic.  The last thing you want is for demanding legal obligations to pop up.

For that reason, when we are drafting legal agreements we usually incorporate provisions which have become collectively known as ‘the Santa Clause’. The basic premise is that a clause requiring legal completion of the contract or lease cannot be triggered during the holiday period.

How does the ‘Santa Clause’ work?

One of the simplest ways for the clause to work, is to ensure that the contractual definition of a ‘Working Day’ is not limited to Monday-Friday inclusive (excluding bank holidays). Instead it should also be widened to include a convenient period around the festivities such as 23rd December to 4th January for example.

Using a clear and precise definition of ‘Working Day’ can also help businesses at other times. For example for other holiday periods or industry shutdowns.

Option Agreements, Overage provisions, Conditional Contracts to buy/sell land and of course, Agreements for Lease, all tend to have provisions which, when triggered, require the parties to complete a deal or pay monies.

It’s sensible for both parties to make sure that these provisions aren’t capable of being triggered at times which would be hugely inconvenient for one, if not all, parties and we need to be alert to the possibility of creating opportunities for unscrupulous parties to make life difficult for our clients on purpose!

Choose your timings wisely…

Where an Agreement for Lease triggers completion of the lease on a certain date, it isn’t only important to delay legal completion, but also to ensure that any rent-free periods start at a time which reflects what both parties have agreed.

Otherwise, a retail tenant might find that a rent-free period starts at a time when the shop wouldn’t be open for trade anyway and they’d likely lose useful time which they could have used for fitting-out in the New Year.

It will be nigh on impossible to recruit new staff or get a fitting-out company to commence works past 20th December in any year, and tenants need to be careful to spend their rent-free periods or other concessions as wisely as possible.

Sometimes, delaying until well into the New Year is sensible for everyone.

Post written by Nikola Guthrie.
December 2018

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