Author: David Linklater

The recent case of Avocet Industrial Estates LLP vs Merol Limited [2011] EWHC (Ch) has imposed an additional burden on commercial tenants wishing to exercise a break option.

Avocet was a commercial tenant and served a break notice to terminate its lease.

The break right, as is often the case, was conditional and required Avocet to pay all rent and “other sums” due under the lease.  It also had to pay a premium.

The tenant paid the premium by cheque, which was delivered to the landlord one day before the break date.  The tenant had a history of paying rent late and the lease provided that the tenant should pay interest on late payments.
Whilst the landlord had indicated that it wanted interest to be paid, it had not invoiced for interest.  The tenant had dismissed the landlord’s request for interest as “silly”.

The tenant vacated the premises and handed it back on the break date.  The landlord refused to accept that the tenant had validly exercised the break, arguing that the premium was not “paid” when the cheque was received (as it had not cleared), and the interest on late cheque payments should have been paid as well.

The disputed interest was approximately £130.

The Court found that the supply of the cheque meant that the premium had been “paid”, as there was an implied agreement that payment could be made by cheque.

However, interest should have been paid as well and therefore the break notice was ineffective and the lease continued.  This was the case even though the landlord had not invoiced for the interest because the lease stated that interest was “payable” regardless of whether or not a formal demand had been made.

As a result of the failure to pay the £130 interest, the tenant now finds itself in a lease that is does not want, which in theory will result in a liability in excess of £300,000.

The break clause in Avocet was not unusual and the provisions regarding interest are also commonplace.  This scenario will affect tenants who have throughout the course of a tenancy paid any sums by cheque, or been at all late in making any payments to the landlord.

A failure to pay any interest due could therefore potentially invalidate a break.  The key to this is in the wording of the lease and if in doubt, legal advice should be sought.

If you would like more information or advice relating to a specific matter, please do not hesitate to contact David Linklater on 01727 798097 or by email at david.linklater@salaw.com or any member of the Property Litigation Team.

© SA LAW 2012
Every care is taken in the preparation of our articles. However, no responsibility can be accepted to any person who acts on the basis of information contained in them. You are recommended to obtain specific advice in respect of individual case.

Author: Nathanael Young

Attack and Counterattack

Recent news stories have highlighted the lengths FIFA are prepared to go to in protecting its brand.

Last Monday’s Holland v Denmark game saw 36 female supporters wearing orange mini dresses participating in an ambush marketing stunt for the Dutch beer brand Bavaria.

Ambush marketing, the practice of finding a way to promote a brand at a high profile event without paying a sponsorship, has long been a marketing strategy of Bavaria. At the 2006 world cup in Germany, 1000 fans wearing branded underwear were denied entry to a Holland game, and more recently it has been targeting the Dutch national team matches.

FIFA has promised to come down hard on any brand trying to highjack the tournament and this was the case last Monday. The group of women were ejected from the stadium and two of the 36 were later arrested. In addition to this, the ITV pundit Robbie Earl has been sacked by ITV as it has emerged that some of the tickets used by Bavaria were from the ex-Jamaica and Wimbledon midfielder’s  allocation;  which he was  prohibited from redistributing to third parties.

Logo or No Logo

With the world cup now in full swing, businesses around the country have included references to the event in their advertising and promotional activity in a bid to cash in on its popularity. Some of those are official sponsors, who have paid millions to be able to do so; however, a considerably large number of businesses haven’t paid for the privilege. They simply seek to associate their business  with the  pride and passion that the tournament evokes, with the ultimate aim of increasing sales. However it does come with some risks attached.

Many business may not be aware of the extent to which FIFA have rights over and above ordinary trademark or copyright protection in South Africa.  FIFA has every motivation to stamp out such practices, which threaten the sponsorship revenues from their official partners. It already has trademark protection over a number of words, like ‘2010 FIFA World Cup’ and images, such as its official emblem for the tournament. The host country has gone so far to keep FIFA and its sponsors happy, it has created a new list of prohibited marks under special legislation, even including the use of ‘2010’ on its own, which is not a trademark.

For businesses operating in the UK, the situation is rather less draconian.  However,  there are reports that FIFA has obtained a ruling against a sports bar near the Loftus stadium using phrases such as ‘World Cup 2010’.

Things to Remember…

The most important guidance is to always avoid the using of any FIFA artwork or branding – such as its logo or the ‘man kicking ball’ official 2010 world cup emblem. For more information and guidance about when you can cannot use World Cup related terms, FIFA has provided a Public Information Sheet which states what is acceptable and the terms of use.
Use of the term ‘World Cup’ or similar phrases is less likely to be an issue, although each situation is different, so it is important to take legal advice in order to avoid prosecution.