A commercial lease generally involves a long-term commitment. Most standard commercial leases last for at least two years, if not longer. The language included in standard commercial leases usually makes a tenant responsible for rent amounts even if the business fails or the tenant ceases operating the business at the rental property.
In scenarios where a commercial tenant must relocate to a bigger space or goes out of business, landlords can demand that the tenants pay the full amount of the remaining rent due. In some cases, either the landlord or the tenant may propose special inclusions in the lease agreement that could allow for the early termination of the rental arrangement in some cases.
A force majeure clause can end a lease early when there are unusual and uncontrollable circumstances.
What is a force majeure clause?
The phrase force majeure is a French term that means greater power or superior force. In the world of commercial leases, a force majeure clause generally only takes effect in highly unusual circumstances. People sometimes refer to force majeure clauses as “act of God clauses.”
When there are unforeseeable and uncontrollable circumstances that prevent a landlord or tenant from fulfilling their lease obligations, a force majeure clause may absolve them of legal and financial culpability. Circumstances that could trigger force majeure clauses include war, natural disasters and acts of terrorism. Sometimes, that means damage to the rental space. It could also relate to an inability to do business due to extreme and uncontrollable circumstances.
Landlords may also benefit from force majeure clauses. Tenants may not be able to hold them legally responsible for a failure to maintain the facilities or provide certain services in accordance with the lease. Such clauses can be mutually beneficial. They can also potentially lay the groundwork for a complex legal dispute. If the two parties do not agree about whether the situation justifies implementing the force majeure clause, then the matter may need to go to court.
Learning more about unique inclusions intended to enhance the protection of commercial leases can help both landlords and tenants. Professionals who know the purpose of specific lease clauses may be able to use that knowledge to negotiate appropriate lease terms.