Termination of a fixed-term lease agreement

Piotr Kłodziński|
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Can one of the most popular civil law relationships, i.e. lease, still have any "secrets"? Is a person even aware that even by not concluding a contract in its most traditional written form, but only by making an oral agreement with another person, he or she is almost entering the realm of civil law?

Civil law is an area of law in which we are all participants, more or less consciously - whether we want it or not. Of course, this participation does not necessarily have to be disclosed in a specific "typically legal" way. And the typical legal way is associated mainly with the involvement of a lawyer or court cases. Meanwhile, by making any purchase, we enter the area of transactions regulated by civil law. As a rule, however, most often we do not experience any typical legal consequences in this respect - apart from taking possession of the purchased item.

The lack of consequences is, of course, not felt due to the fact that (fortunately) the vast majority of people, when making a purchase, express their willingness to fulfill the obligation to pay for the purchased item. In fact, failure to pay (especially when the subject of the purchase is an item of greater value) could result in the need for this "noticeable" legal action. Whether we like it or not, civil law surrounds us almost everywhere. And even when we simply "agree" on the use of someone else's property without leaving a "trace" in the form of a written contract, we enter into a civil law relationship and we have to take into account the consequences that this fact may entail. And there is no major problem with it as long as both parties want to cooperate in harmony and accept each other's conditions - and this remains the case throughout the entire period of mutual cooperation. However, a problem arises when a different vision comes into play and a conflict of interests arises. This is when the provisions of civil law come to the rescue.

It is important to remember that in every relationship (even the best) there may be conflict. Therefore - especially when things of greater value are involved (such as premises) - as a form of "approval" of the mutual agreement regarding the use of this thing, it is recommended to sign a document regulating mutual relations - in the form of a contract. Then, broadly speaking, both parties have the opportunity to present their own idea of what the use should look like, what its scope should be, and, among others, how long it should last. Terms written in the form of a contract exclude (or at least minimize) situations such as misunderstandings caused by (sometimes alleged) ignorance of the other party's expectations. The contract (especially one prepared by a professional in a law firm) should take into account all possible circumstances and protect mutual interests as effectively as possible. And it should be noted right away that this does not necessarily have to be about a lack of trust between one side and the other and being suspected of possible bad will. As we know, an ordinary conversation can turn out differently, and many quarrels were in fact unnecessary because they resulted only from a lack (or incorrect) understanding of the other party's intentions.

For example, this situation can be illustrated in the following way: Jan Nowak, in one of the towns near Warsaw, has a plot of land with a single-family house and a large yard with several farm buildings, which are remnants of a farm run by his parents in the past. The buildings are kept in good condition, but a significant part of them simply stands empty (not used). Andrzej Kowalski bought a neighboring plot and built a house on it, but he does not yet have a garage for his car. So Kowalski reaches an agreement with Nowak to rent one of the mutually convenient rooms in Nowak's building as a garage for a symbolic fee. They know each other well so they do not sign the contract. Kowalski, knowing Nowak well and thinking that there will be no problem with his vehicle being "stationed" at his neighbor's for a few years (after all, the buildings have been empty for many years), postpones the construction of the garage in order to undertake other (let's assume equally important) investments for a new house. . At the same time, over time, apart from the car room, Kowalski (with Nowak's consent) "cozies up" in almost the entire building, also storing gardening tools, garden furniture, etc. However, after a few months, winter comes, and during this time it turns out that Nowak's son receives an offer to "enter" a certain lucrative business, which will require the use of all his father's farm buildings. He wants to implement his plans quickly, so Nowak informs Kowalski that his car and all equipment must leave the "safe" place overnight. Kowalski is angry that the situation is taking such a sudden turn (and in unfavorable winter conditions). Nowak does not understand his neighbor's emotions - after all, he was only doing him a favor without specifying the details of the agreement.

Leaving aside the issues of legal possibilities (which arise from the fact of concluding a contract even in a purely verbal form), the above situation even tempts the comment that: "the contract should have been concluded in writing." The process of signing the contract forces the parties to take up various issues important for their mutual relations (especially those related to the legal framework), such as the scope or period of the lease. And appropriate prior arrangements in this area would make both parties (acting mutually in good faith) have to include appropriate regulations in the content of the contract itself. One party would also have to take into account that the other party may terminate the contract within a specified period. This, in turn, would perhaps avoid being put in a difficult situation and the unpleasantness associated with it. It seems that each party hoped that "it would work out somehow", without taking into account the dynamics that often occur in civil law relationships.

At the same time, it must be remembered that when it comes to the nature of the lease relationship, the issues of notice periods are really very important. After all, leasing involves periodically handing over control of your property to another person. Termination of a fixed-term lease agreement however, it is an institution that allows you to "recover" this power (i.e. the right to dispose of your property), and in some circumstances this may be of great importance (as in the example presented above). Moreover, both parties may act in really good faith and not be aware that specific solutions have not been taken into account.

For example (to expand on the above story): Nowak and his son, on various occasions, held personal debates on possible ways of developing the empty farm buildings. However, due to the lack of both own ideas and external proposals, these debates did not lead to specific actions, and the situation remained unchanged for many years. Nowak, not considering renting one room (as it was originally supposed to be) to be important, did not inform his son about it. However, the unaware son, remembering the above-mentioned conversation when the opportunity arose, thinking that he was acting in his father's interest (and at the same time not knowing about his agreement with the neighbor), he had already managed - before informing his father about his plans - to make certain timely business commitments taking into account the 100% share of the above-mentioned. farm buildings. Hence, it was necessary to immediately "evict" Kowalski from one of the farm buildings.

Both sides acted in good faith, without a pinch of malice (on the contrary, with a sincere willingness to cooperate/help). Isn't this what our mutual "agreements" look like sometimes?

Many people may say that this is a made-up case. But isn't human life often made up of just such "cases"?

Translating the above situation into legal arguments, if Kowalski went to court (and had appropriate argumentation in the form of evidence), Nowak's son would have major problems in fulfilling his business obligations.

It must be remembered that in accordance with the regulations premises lease agreement or premises for a period longer than one year should be concluded in writing, but if this form is not observed, the contract is deemed to be concluded for an indefinite period.

Additionally, if the duration of the lease is not specified, both the landlord and the tenant may terminate the lease subject to the contractual deadlines and, failing that, the statutory deadlines. The statutory deadlines are as follows:

  • when the rent is payable at intervals longer than a month - the lease may be terminated no later than three months in advance at the end of the calendar quarter;
  • when the rent is payable monthly - the lease can be terminated one month in advance at the end of the calendar month;
  • when the rent is payable at shorter intervals - the lease can be terminated three days in advance;
  • when the rental is daily - the rental can be terminated one day in advance.

The above, in the light of the example presented, suggests that: if we have appropriate evidence confirming that Kowalski made an appointment with Nowak without specifying the lease period and at the same time makes payments for the lease once every three months - the (oral) contract concluded between them could be terminated with a three-month period. notice. Nowak's son would therefore have to wait as long as three months to implement his business plans, i.e. until the formal termination of the contract concluded by his father. However, taking into account the obligations he has made, this could involve him in certain losses.

above the circumstances clearly indicate that the lease relationship (regardless of the circumstances surrounding it) should be regulated in writing - at least because of the potential subsequent difficulties in a possible evidentiary process (e.g. in proving the actual period for which the oral data an agreement between the parties has been concluded).

The above is particularly important in relation to a lease concluded for a fixed period, because in accordance with applicable regulations, in such a situation, both the landlord and the tenant may terminate the lease in the cases specified in the contract. The phrase "in the cases specified in the contract" is key here. It suggests that the issues of termination in the case of such a contract should be regulated in its content. What if the contract does not contain such provisions at all? The lack of other statutory regulations in this respect, combined with the lack of appropriate provisions in the content of the contract itself, raises serious doubts as to possible methods of terminating a contract concluded for a fixed period. Therefore, since even the written form of a contract sometimes (due to certain shortcomings) poses so many difficulties and doubts, one can only imagine how many evidentiary problems a simple oral agreement brings.

As you know, lease agreement concluded for a specified period of time includes its validity period. It can be given, for example, by specifying exact dates or by specifying the number of months, e.g.:

  • "The contract is concluded for the period from March 1, 2020 to November 30, 2020",
  • "The contract is concluded for a period of one year from the date of its signing." – however, in this case, remember to clearly specify the date of signing (it happens that the contract is not signed by both parties on the same day; this, in turn, could raise unnecessary doubts as to the initial date of validity).

Taking into account the above provision - according to which a contract concluded for a fixed period may be terminated in "cases specified in the contract" - in the absence of appropriate provisions in the contract itself, it cannot be terminated by the parties at will. Then, unfortunately, as a rule, it is necessary to "wait" until the end of its validity period. In order to terminate such a contract before the period specified in the contract, it is of course also possible to try to reach an agreement with the other party. But it's not always easy.

In connection with the above, in relation to lease agreements concluded for a fixed period, special attention should be paid to including provisions regarding the deadlines within which the parties will be able to terminate such an agreement. For example

"Each party has the right to terminate the contract with a three-month notice period, counted from the end of the month in which the notice was delivered.

At the same time, depending on the individual situation and circumstances, the contract may provide for the right to terminate the contract for both parties or, for example, only one of them (i.e. either the landlord or the tenant). The principle of freedom to conclude contracts applies here, and therefore the parties can often shape the content of such a contract in any way - according to their own discretion and interests.

ATTENTION! Depending on the type of contract and what is the subject of the lease, some provisions regarding the termination of contracts at a specific time or for specific reasons, included in e.g. premises lease agreements or employment contracts, may turn out to be legally ineffective.

The above is particularly important not only in situations specific to business relationships, but also in personal ones.

For example: Anna Kowalska rented a residential premises from Katarzyna Wiśniewska under a lease agreement for a period of two years (counted from the date of its signing). The contract did not include a clause regarding a possible notice period. Kowalska did not want the contract to include such a provision, because at the stage of signing it she anticipated that she would like to extend the lease period rather than shorten it. Wiśniewska, on the other hand, had been renting this apartment for years, so she only cared about it not being empty. After about 6 months, it turned out that Kowalska received a chance to go abroad for a 3-year contract (ensuring her professional development). Of course, taking into account the planned period of absence from the country, she decided that for economic reasons she should terminate the lease agreement. Due to the lack of appropriate regulations in the contract, she had to reach an agreement with Wiśniewska, who ("in her favor") decided that they would terminate the contract by mutual consent of the parties when new tenants were found. Due to the circumstances (i.e. the fact that Kowalska is obliged to pay the rent anyway), Wiśniewska was in no hurry to search and the apartment was rented only after half a year. Kowalska (preoccupied with a trip abroad), having no time to consult a legal advisor (and look for other legal solutions to resolve this unfavorable situation), spent the entire period paying rent for an apartment that she no longer actually used.

It must be remembered that such circumstances, i.e. changes in business or personal plans, are not just rare exceptions to the rule - just like not entirely honest contractors who will try to "win" as much of their own advantage as possible. Contracts, especially those concluded for a longer period of time, require analysis and the ability to anticipate certain potentially possible situations. Thanks to this, we have a chance to include provisions protecting our interests. Of course, there may be a fear that (having such a right arising from the content of the contract itself) the other party will terminate the contract at a time that is not always convenient for us. However, if we are aware of the provisions agreed in the contract, we can be sure that even in the event of termination, we will have a certain period of time to leave the previously occupied premises and look for a new one (this circumstance should also be taken into account when formulating the provisions of the concluded lease agreement).

Certainly, all the situations mentioned above - subjected to in-depth analysis at a legal advisor's office - could have taken a completely different turn. The law provides certain other legal remedies that can be used in certain circumstances, and a good lawyer will certainly find these remedies and be able to apply them (proving the existence of certain conditions). However, this involves both time, additional costs and often (unfortunately) the risk of failure (especially when taking these measures requires the involvement of the court). In this case, as in most situations, the best solutions are the simplest solutions - and this includes appropriate preparation of the content of the contract we conclude, its consistent solutions, and in any case, it is worth using the help of a professional - a lawyer or a legal advisor.

Piotr Kłodziński – Legal services for companies

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Can one of the most popular civil law relationships, i.e. lease, still have any "secrets"? Is a person even aware that even by not concluding a contract in its most traditional written form, but only by making an oral agreement with another person, he or she is almost entering the realm of civil law?

Civil law is an area of law in which we are all participants, more or less consciously - whether we want it or not. Of course, this participation does not necessarily have to be disclosed in a specific "typically legal" way. And the typical legal way is associated mainly with the involvement of a lawyer or court cases. Meanwhile, by making any purchase, we enter the area of transactions regulated by civil law. As a rule, however, most often we do not experience any typical legal consequences in this respect - apart from taking possession of the purchased item.

The lack of consequences is, of course, not felt due to the fact that (fortunately) the vast majority of people, when making a purchase, express their willingness to fulfill the obligation to pay for the purchased item. In fact, failure to pay (especially when the subject of the purchase is an item of greater value) could result in the need for this "noticeable" legal action. Whether we like it or not, civil law surrounds us almost everywhere. And even when we simply "agree" on the use of someone else's property without leaving a "trace" in the form of a written contract, we enter into a civil law relationship and we have to take into account the consequences that this fact may entail. And there is no major problem with it as long as both parties want to cooperate in harmony and accept each other's conditions - and this remains the case throughout the entire period of mutual cooperation. However, a problem arises when a different vision comes into play and a conflict of interests arises. This is when the provisions of civil law come to the rescue.

It is important to remember that in every relationship (even the best) there may be conflict. Therefore - especially when things of greater value are involved (such as premises) - as a form of "approval" of the mutual agreement regarding the use of this thing, it is recommended to sign a document regulating mutual relations - in the form of a contract. Then, broadly speaking, both parties have the opportunity to present their own idea of what the use should look like, what its scope should be, and, among others, how long it should last. Terms written in the form of a contract exclude (or at least minimize) situations such as misunderstandings caused by (sometimes alleged) ignorance of the other party's expectations. The contract (especially one prepared by a professional in a law firm) should take into account all possible circumstances and protect mutual interests as effectively as possible. And it should be noted right away that this does not necessarily have to be about a lack of trust between one side and the other and being suspected of possible bad will. As we know, an ordinary conversation can turn out differently, and many quarrels were in fact unnecessary because they resulted only from a lack (or incorrect) understanding of the other party's intentions.

For example, this situation can be illustrated in the following way: Jan Nowak, in one of the towns near Warsaw, has a plot of land with a single-family house and a large yard with several farm buildings, which are remnants of a farm run by his parents in the past. The buildings are kept in good condition, but a significant part of them simply stands empty (not used). Andrzej Kowalski bought a neighboring plot and built a house on it, but he does not yet have a garage for his car. So Kowalski reaches an agreement with Nowak to rent one of the mutually convenient rooms in Nowak's building as a garage for a symbolic fee. They know each other well so they do not sign the contract. Kowalski, knowing Nowak well and thinking that there will be no problem with his vehicle being "stationed" at his neighbor's for a few years (after all, the buildings have been empty for many years), postpones the construction of the garage in order to undertake other (let's assume equally important) investments for a new house. . At the same time, over time, apart from the car room, Kowalski (with Nowak's consent) "cozies up" in almost the entire building, also storing gardening tools, garden furniture, etc. However, after a few months, winter comes, and during this time it turns out that Nowak's son receives an offer to "enter" a certain lucrative business, which will require the use of all his father's farm buildings. He wants to implement his plans quickly, so Nowak informs Kowalski that his car and all equipment must leave the "safe" place overnight. Kowalski is angry that the situation is taking such a sudden turn (and in unfavorable winter conditions). Nowak does not understand his neighbor's emotions - after all, he was only doing him a favor without specifying the details of the agreement.

Leaving aside the issues of legal possibilities (which arise from the fact of concluding a contract even in a purely verbal form), the above situation even tempts the comment that: "the contract should have been concluded in writing." The process of signing the contract forces the parties to take up various issues important for their mutual relations (especially those related to the legal framework), such as the scope or period of the lease. And appropriate prior arrangements in this area would make both parties (acting mutually in good faith) have to include appropriate regulations in the content of the contract itself. One party would also have to take into account that the other party may terminate the contract within a specified period. This, in turn, would perhaps avoid being put in a difficult situation and the unpleasantness associated with it. It seems that each party hoped that "it would work out somehow", without taking into account the dynamics that often occur in civil law relationships.

At the same time, it must be remembered that when it comes to the nature of the lease relationship, the issues of notice periods are really very important. After all, leasing involves periodically handing over control of your property to another person. Termination of a fixed-term lease agreement however, it is an institution that allows you to "recover" this power (i.e. the right to dispose of your property), and in some circumstances this may be of great importance (as in the example presented above). Moreover, both parties may act in really good faith and not be aware that specific solutions have not been taken into account.

For example (to expand on the above story): Nowak and his son, on various occasions, held personal debates on possible ways of developing the empty farm buildings. However, due to the lack of both own ideas and external proposals, these debates did not lead to specific actions, and the situation remained unchanged for many years. Nowak, not considering renting one room (as it was originally supposed to be) to be important, did not inform his son about it. However, the unaware son, remembering the above-mentioned conversation when the opportunity arose, thinking that he was acting in his father's interest (and at the same time not knowing about his agreement with the neighbor), he had already managed - before informing his father about his plans - to make certain timely business commitments taking into account the 100% share of the above-mentioned. farm buildings. Hence, it was necessary to immediately "evict" Kowalski from one of the farm buildings.

Both sides acted in good faith, without a pinch of malice (on the contrary, with a sincere willingness to cooperate/help). Isn't this what our mutual "agreements" look like sometimes?

Many people may say that this is a made-up case. But isn't human life often made up of just such "cases"?

Translating the above situation into legal arguments, if Kowalski went to court (and had appropriate argumentation in the form of evidence), Nowak's son would have major problems in fulfilling his business obligations.

It must be remembered that in accordance with the regulations premises lease agreement or premises for a period longer than one year should be concluded in writing, but if this form is not observed, the contract is deemed to be concluded for an indefinite period.

Additionally, if the duration of the lease is not specified, both the landlord and the tenant may terminate the lease subject to the contractual deadlines and, failing that, the statutory deadlines. The statutory deadlines are as follows:

  • when the rent is payable at intervals longer than a month - the lease may be terminated no later than three months in advance at the end of the calendar quarter;
  • when the rent is payable monthly - the lease can be terminated one month in advance at the end of the calendar month;
  • when the rent is payable at shorter intervals - the lease can be terminated three days in advance;
  • when the rental is daily - the rental can be terminated one day in advance.

The above, in the light of the example presented, suggests that: if we have appropriate evidence confirming that Kowalski made an appointment with Nowak without specifying the lease period and at the same time makes payments for the lease once every three months - the (oral) contract concluded between them could be terminated with a three-month period. notice. Nowak's son would therefore have to wait as long as three months to implement his business plans, i.e. until the formal termination of the contract concluded by his father. However, taking into account the obligations he has made, this could involve him in certain losses.

above the circumstances clearly indicate that the lease relationship (regardless of the circumstances surrounding it) should be regulated in writing - at least because of the potential subsequent difficulties in a possible evidentiary process (e.g. in proving the actual period for which the oral data an agreement between the parties has been concluded).

The above is particularly important in relation to a lease concluded for a fixed period, because in accordance with applicable regulations, in such a situation, both the landlord and the tenant may terminate the lease in the cases specified in the contract. The phrase "in the cases specified in the contract" is key here. It suggests that the issues of termination in the case of such a contract should be regulated in its content. What if the contract does not contain such provisions at all? The lack of other statutory regulations in this respect, combined with the lack of appropriate provisions in the content of the contract itself, raises serious doubts as to possible methods of terminating a contract concluded for a fixed period. Therefore, since even the written form of a contract sometimes (due to certain shortcomings) poses so many difficulties and doubts, one can only imagine how many evidentiary problems a simple oral agreement brings.

As you know, lease agreement concluded for a specified period of time includes its validity period. It can be given, for example, by specifying exact dates or by specifying the number of months, e.g.:

  • "The contract is concluded for the period from March 1, 2020 to November 30, 2020",
  • "The contract is concluded for a period of one year from the date of its signing." – however, in this case, remember to clearly specify the date of signing (it happens that the contract is not signed by both parties on the same day; this, in turn, could raise unnecessary doubts as to the initial date of validity).

Taking into account the above provision - according to which a contract concluded for a fixed period may be terminated in "cases specified in the contract" - in the absence of appropriate provisions in the contract itself, it cannot be terminated by the parties at will. Then, unfortunately, as a rule, it is necessary to "wait" until the end of its validity period. In order to terminate such a contract before the period specified in the contract, it is of course also possible to try to reach an agreement with the other party. But it's not always easy.

In connection with the above, in relation to lease agreements concluded for a fixed period, special attention should be paid to including provisions regarding the deadlines within which the parties will be able to terminate such an agreement. For example

"Each party has the right to terminate the contract with a three-month notice period, counted from the end of the month in which the notice was delivered.

At the same time, depending on the individual situation and circumstances, the contract may provide for the right to terminate the contract for both parties or, for example, only one of them (i.e. either the landlord or the tenant). The principle of freedom to conclude contracts applies here, and therefore the parties can often shape the content of such a contract in any way - according to their own discretion and interests.

ATTENTION! Depending on the type of contract and what is the subject of the lease, some provisions regarding the termination of contracts at a specific time or for specific reasons, included in e.g. premises lease agreements or employment contracts, may turn out to be legally ineffective.

The above is particularly important not only in situations specific to business relationships, but also in personal ones.

For example: Anna Kowalska rented a residential premises from Katarzyna Wiśniewska under a lease agreement for a period of two years (counted from the date of its signing). The contract did not include a clause regarding a possible notice period. Kowalska did not want the contract to include such a provision, because at the stage of signing it she anticipated that she would like to extend the lease period rather than shorten it. Wiśniewska, on the other hand, had been renting this apartment for years, so she only cared about it not being empty. After about 6 months, it turned out that Kowalska received a chance to go abroad for a 3-year contract (ensuring her professional development). Of course, taking into account the planned period of absence from the country, she decided that for economic reasons she should terminate the lease agreement. Due to the lack of appropriate regulations in the contract, she had to reach an agreement with Wiśniewska, who ("in her favor") decided that they would terminate the contract by mutual consent of the parties when new tenants were found. Due to the circumstances (i.e. the fact that Kowalska is obliged to pay the rent anyway), Wiśniewska was in no hurry to search and the apartment was rented only after half a year. Kowalska (preoccupied with a trip abroad), having no time to consult a legal advisor (and look for other legal solutions to resolve this unfavorable situation), spent the entire period paying rent for an apartment that she no longer actually used.

It must be remembered that such circumstances, i.e. changes in business or personal plans, are not just rare exceptions to the rule - just like not entirely honest contractors who will try to "win" as much of their own advantage as possible. Contracts, especially those concluded for a longer period of time, require analysis and the ability to anticipate certain potentially possible situations. Thanks to this, we have a chance to include provisions protecting our interests. Of course, there may be a fear that (having such a right arising from the content of the contract itself) the other party will terminate the contract at a time that is not always convenient for us. However, if we are aware of the provisions agreed in the contract, we can be sure that even in the event of termination, we will have a certain period of time to leave the previously occupied premises and look for a new one (this circumstance should also be taken into account when formulating the provisions of the concluded lease agreement).

Certainly, all the situations mentioned above - subjected to in-depth analysis at a legal advisor's office - could have taken a completely different turn. The law provides certain other legal remedies that can be used in certain circumstances, and a good lawyer will certainly find these remedies and be able to apply them (proving the existence of certain conditions). However, this involves both time, additional costs and often (unfortunately) the risk of failure (especially when taking these measures requires the involvement of the court). In this case, as in most situations, the best solutions are the simplest solutions - and this includes appropriate preparation of the content of the contract we conclude, its consistent solutions, and in any case, it is worth using the help of a professional - a lawyer or a legal advisor.

Piotr Kłodziński – Legal services for companies

Rate this post