Since the beginning of the SARS-CoV-2 virus pandemic, we have been accompanied by: uncertainty about our own health and that of our loved ones, constant fear for our jobs, as well as financial losses directly related to the numerous restrictions on business operations. This article analyses the legal situation of the catering and retail industries, which – due to renting premises in shopping centres subject to trading bans – have found themselves in a particularly difficult economic situation.
The amendment to the so-called Covid Act from 31 March 2020 (Act of 31 March 2020, Amending the Act on Special Solutions Related to the Prevention and Combating of COVID-19, Other Infectious Diseases and Crisis Situations Caused by Them, and Certain Other Acts (Journal of Laws 2020, item 568), also known as anti-crisis shield, introduced specific legal solutions regarding the lease of commercial space in shopping malls with a sales area exceeding 2,000 m2, during the period of restrictions on trade therein.
Commercial premises lease agreement
Pursuant to Art. 15 from section 1 anti-covid law, during the period in which trade restrictions in shopping malls are in force, the mutual obligations of the parties to the lease, tenancy or other similar agreement under which the commercial space is put into use expire. Pursuant to art. 15 from section 2 of the said Act, the entitled person should submit an unconditional and binding offer of will to extend the contract on the existing terms and conditions for the duration of the ban extended by six months. Extension offer commercial premises lease agreements should be submitted within 3 months of the lifting of the trading ban in the shopping centre. If this period expires without a valid submission, the landlord shall not be bound by the principle of discharge of obligations. Despite legislative attempts to provide instruments minimizing the economic impact of the pandemic, the dynamic pace of legislative changes generates uncertainty regarding the timeliness and scope of the regulations in force.
The solutions introduced in anti-crisis shield became a kind of contribution to starting a discussion about the difficult situation of tenants of premises in shopping malls. Entrepreneurs are openly demanding a reduction in rents and associated service fees, citing, among others, on art. 3571 Civil Code. Article 3571 Civil Code, also called the clause rebus sic stantibus, serves a protective function in the event of situations that the parties to the contract could not have predicted at the time of its conclusion. Pursuant to Art. 3571 Under the Civil Code, the court is given the power to change the legal relationship existing between the parties (for example, a lease agreement for premises in a shopping mall). The provision in question is an example of a limitation of the principle pacta sunt servanda (contracts must be kept), which since Roman law has been considered a guarantee of certainty in economic transactions. Clause rebus sic stantibus results directly from the principle of equity, ensuring the possibility of modifying the legal relationship in the event of an extraordinary event per se could not have been foreseen by the parties to the agreement and thus goes beyond the average contractual risk.
Disputes between tenants and landlords, triggered by restrictions on commercial activity introduced as a result of the pandemic outbreak, are generating new legal issues. The nature of the agreement between the parties has been called into question – should it be classified as commercial premises lease agreementor perhaps as a lease agreement.
The classification of an agreement is determined not by its name, but by its content. When examining the type of agreement, its content must be analysed, taking into account the rights and obligations of the parties, as well as the purpose of the contract.
Example: A car rental contract for 150 years, in which the tenant undertakes to refuel it and take care of its condition, paying a one-time price equal to its value, is in fact a contract for the sale of this car.
Above all lease agreement The rights granted to the parties differ from the lease agreement. Under the lease agreement, the tenant gains the right to use the item, while the lease agreement entitles the lessor not only to use the leased item, but also to collect benefits from it. The lease agreement is a mutual agreement - the lessor gives the thing for use and benefits, and the lessee undertakes to pay rent. According to the view expressed by the Supreme Court, ""every thing, regardless of its kind, can bring natural and civil benefits" (judgment of the Supreme Court of March 31, 1987, I CR 287/86, LEX no. 936454). Therefore, commercial space in the mall can also bring benefits
Lease in shopping malls
Even though the Supreme Court indicated that conducting commercial activities on real estate should not be classified as receiving benefits from it: "The direct use of an item in business activities does not constitute the collection of civil benefits, as income in this case is only the final result of the business activity. (Judgment of the Supreme Court of November 30, 2000, I CKN 924/98), such a view, in the author's opinion, does not deserve full approval. The current social and economic situation shows, as if in a kaleidoscope, that an entrepreneur's profit depends not on the nature of the business, but primarily on the characteristics of the premises where the business is conducted. The location of a store or restaurant is one of the factors when a customer chooses a given premises. Often, stores that offer the same goods and are owned by the same person will earn different revenues depending on their location. Achieving the turnover that will ensure good prosperity of the premises depends primarily on the area in which the business is conducted. The quality of services becomes a secondary issue.
Commercial real estate specialists repeat: “The 3 most important features of a commercial premises? Location, location and once again location.
Shopping malls are widely considered to be attractive locations for entrepreneurs because they offer greater traffic intensity of potential customers, which translates directly into higher profits for the company. rental in shopping mallsThe established considerations are also confirmed by the methodology for valuing the rent of a commercial unit in a shopping centre: the rent for a unit located on the first floor will be, on average, half that of a unit on the ground floor. Therefore, the view that the use of a unit in a gallery should actually be considered as deriving benefits from it is justified, as the profit directly depends on the quality of the unit, i.e. its attractiveness to the customer. Thus, referring to the previously indicated characteristics of a lease agreement, a tenant who rents commercial space, de facto includes a lease agreement, as it derives benefits from the use of its location.
If, after analysing the content and purpose of the agreement, the original lease agreement is recognised as a lease, the lessee (tenant of the gallery premises) may, on the basis of Article 700 of the Civil Code, request a reduction of rent for the period during which circumstances occurred that significantly reduced their usual income, and for which they are not responsible and which do not concern them personally.
The pandemic period can undoubtedly be considered such circumstances. The pandemic is an external event which the lessee could not have predicted, is not responsible for, and cannot prevent its effects.
The Court of Appeal in Wrocław held that "the basis for the rent reduction provided for in Art. 700 of the Civil Code, there is only ordinary income from the subject of lease” – That is "average, on a scale of at least several years, the income that the subject of the lease would bring if it were rationally used for the purposes provided for in the contract" (Judgment of the Court of Appeal in Wrocław of 15 February 2013, I ACa 25/13). Trade restrictions related to the virus pandemic are causing a decline in interest in retail, resulting in entrepreneurs – tenants/lessees of premises – recording a continuous fall in revenue compared to pre-pandemic levels achieved in recent years.
Having regard to the above considerations, it should be noted a casu ad casum assess whether the lease agreements for commercial space in the shopping mall do not in fact contain any material elements of the lease agreement (essentialia negotii), which would allow for a reduction in the rent for the premises pursuant to Art. 700 CC directly or by analogyFor now, unfortunately, the case law established by the Supreme Court over 20 years ago is different, but critical voices are heard from many sides, pointing to the need to change it and issue rulings applying leasehold provisions to so-called gallery lease agreements. Leasehold is a legal relationship that is far more appropriate for defining this relationship.
Piotr Kłodziński | Legal services for companies
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