Break clauses and notices—exercising breaks and conditions precedent


Published by a UUÂãÁÄÖ±²¥ Property Disputes expert
Practice notes
COVID-19

Break clauses and notices—exercising breaks and conditions precedent


Published by a UUÂãÁÄÖ±²¥ Property Disputes expert

Practice notes
COVID-19
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This Practice Note explains, in the context of both residential and business leases, what a break clause is, when it may be exercised (including interpretation of common deadlines for when to serve a break notice and the meaning of ‘year’, ‘month’ and ‘corresponding date rule’) and the form of a break notice. It covers case law in respect of errors in compliance with break notice Requirements, in particular the reasonable recipient test under Mannai, and its application to common types of error. It covers the application of Mannai to service of statutory notices and the different types of error that are commonly made, namely Completion errors and form errors. It also considers what happens when a mistake in a break notice is spotted (including serving another notice without prejudice to the validity of the first and/or arguments that validity issues have been waived), and whether or not a break notice can be withdrawn or waived and the effects of withdrawal or waiver, including the potential loss of covenants. It also covers compliance

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United Kingdom
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Key definition:
Conditions precedent definition
What does Conditions precedent mean?

In leveraged finance transactions, conditions precedent are commonly split into conditions precedent to signing and conditions precedent to closing. Conditions precedent to signing are conditions that must be satisfied by the borrower before the facility agreement can take effect. Conditions precedent to closing are conditions which must be satisfied by the borrower before it is entitled to draw down funds under the facilities agreement.

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