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Suppose a lease agreement that was agreed and signed by both parties specifies the following:

Rent: £1,560.00 per calendar month (annual rent equals to eighteen thousand seven hundred and twenty pounds).

Payable: The first payment of £9,360.00p (inclusive of 6 months rent in advance) will be due on or before the signing of this agreement.

Further payments of £1,668.33 on the 29th Day of each month commencing May 2019 will be payable to the Landlord.

The tenant will not be due to pay the last two months’ rent of the tenancy, that is; November 2019 and December 2019.

One may note that 1668.33*4/6 is actually more than £2000 less in total than 1560 per month.

Which of these terms should prevail in interpreting this contract? And what would be the standing if seemingly neither of the parties noticed and rent simply got paid on a schedule of 9360+1560+1560+1560+1560+1560+1560? Would the tenant have overpaid by 2686.68 and be due a refund for this amount if such was pursued within the standard civil limitation period of 6 years? Why or why not?

I am tempted to recall that there is something within the unfair contract terms provisions which stipulates that in case of contradictory ambiguity, the conflict ought to be resolved in favour of the consumer when interpreting, and this conclusion would seem to be further supported by the fact that as one may expect, it was the landlord who had originally drafted/supplied the contract for both parties to sign.

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  • Some information is missing. Since the clause mentions May 2019, does that mean that tenancy started six months earlier? was it also on the 29th of that month? why are you multiplying 1668.33 by 4/6? does the contract explain the difference between 1560 and 1668.33? Jan 6, 2023 at 15:06
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    The contract says "no payment for the last two months". The £1668 is weird.
    – gnasher729
    Jan 6, 2023 at 15:09
  • @IñakiViggers this is a very good point! Actually 6 months were due on commencement which was in turn on 29/01, only 4 months before the next payment was due. Jan 6, 2023 at 19:37
  • @gnasher729 Yes indeed! Jan 6, 2023 at 19:39
  • @gnasher729 "The contract says "no payment for the last two months"." That is because the tenant paid upfront on January 29th the rent for those two months. Jan 8, 2023 at 11:52

3 Answers 3

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I'm not hundred percent sure what the contract means - so if I'm correct, then this will be held against the person creating the contract.

My interpretation is that you safe about £3,000 if you stay for 12 months, by not paying for the last two months. On the other hand, if you decided to leave after 10 months, you pay a little bit more than £1560 per month. That's a reasonable interpretation of unclear terms that you could insist on. On the other hand, it may be exactly the interpretation that was intended.

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Both

See Does how a court interpret a contract depend on whether it's a layman or expert who wrote the contract?

Contracts are to be interpreted, among other things, in the light of normal industry practice. Normal practice is that annual rents are payable monthly in advance - this contract is explicitly overriding that which is fine. It is also normal industry practice to give new commercial tenants a “rent holiday” - this usually occurs at the beginning of the lease to assist the tenant with moving costs but here the rent is front loaded and the holiday occurs at the end.

So, the month rent is £1,560. However, for the first year the tenant will pay £9,360 in advance and then, commencing on 29 May 2019, they will pay 4 monthly payments of £1,668.33. As you say, this is a saving of more than £2,000 on the first year’s rent. As previously mentioned, it is not uncommon for the tenant to be given a discount on the first year’s rent - this is that discount.

If the tenancy continues, the rent will be due on the 29th and be £1,560 subject to any adjustment clause in the lease. If such clause exists, it and possibly other clauses can refer to the “monthly rent” without having to worry about the first year modifications.

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  • What is meant by the words “payable monthly in advance”? Jan 7, 2023 at 2:52
  • @Seekinganswers which of those rather straightforward words is giving you trouble?
    – Dale M
    Jan 7, 2023 at 3:32
  • I think I now understand it: each month is due to be paid in advance of the respective month’s occupation. Jan 7, 2023 at 11:49
  • @Seekinganswers bingo
    – Dale M
    Jan 7, 2023 at 11:50
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Contradictory terms in a contract - which would prevail?

The doctrine of contra proferentem provides that ambiguous terms are to be reasonably interpreted in favor of the party who did not draft the contract.

One may note that 1668.33*4/6 is actually more than £2000 less in total than 1560 per month.

There is a flaw in that rationale. It is unclear why you bring up the multiplier 4/6. The most important point to make is that the tenant is not saving any money.

The payment of £9,360.00 is due on January 29th, and that amount explicitly covers six months. This means that on May 29th, when the next payment is due, the landlord has earned four of those six months. The reason why the tenant will not have to pay on November 29th and December 29th is the hitherto unearned amount of £3,120.00 from the payment he made on January 29th.

Would the tenant have overpaid by 2686.68 and be due a refund for this amount if such was pursued within the standard civil limitation period of 6 years?

It depends on whether the lease explains why a monthly surcharge (i.e., the difference between £1668.33 and £1560.00) is applied from May 29th through October 29th, both inclusive.

The lack of such justification avails the tenant of the doctrine of contra proferentem. Accordingly, at the end of the lease the tenant will be entitled to a refund of the excess: 6 x ( £1668.33 - £1560.00) = £649.98.

Conversely, a justification in the lease regarding that surcharge would preempt an ambiguity and therewith the doctrine of contra proferentem. In that case, the tenant willfully agreed upon a surcharge about which he was informed via the lease.

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  • Excellent answer. There is no such explanation of the money surcharge of £108.33 in the lease. Now, the question becomes: would this £3120 that was paid prior to 29/10 but unearned (a funny turn of language to refer to being due rent, often explicitly termed “unearned income” in laws, but useful here, nonetheless) until 29/11, be considered a deposit to secure the performance of future liabilities, or a discharge of those liabilities in respect of 29/11 and 29/12 itself? If the former, then would this £3120 held-but-not-immediately-earned not constitute a tenancy deposit under s213, housing.. Jan 7, 2023 at 14:53
  • ..act 2003, thereby requiring protection? Jan 7, 2023 at 14:53
  • @Seekinganswers "be considered a deposit to secure the performance of future liabilities, or a discharge of those liabilities in respect of 29/11 and 29/12 itself?" It seemingly means the latter because the clause (1) is explicit in "inclusive of 6 months rent in advance", and (2) provides that on November 29th and on December 29th the tenant does not have to pay. That nature of "held but not immediately earned" is no different from paying on January 29th the rent of the 2nd, 3rd, and 4th months. Jan 7, 2023 at 15:26
  • this is a good point. Against it I see the following questions : 1) what would be the standing if there had been agreed a 6 month break clause, whether written or not? I recall one being orally negotiated and agreed, but didn’t see it when recently reviewing the written contract, though perhaps it was in there and that was simply an oversight. 2) it still strikes me as likely to be treated as a bit different, as: what would be the functional purpose/motivation for it? Jan 7, 2023 at 17:43
  • There is a case that I read about i shall find the reference for later in which a court was, I think rightly, quite unsympathetic to landlords taking last months’ rent as a way to protect against tenant’s wordin withholding it in consideration of the held deposit, but not then protecting the last months’ rent. Does circumventing the protection requirements and added security not strike you as presumably to be the motivations behind these contractual provisions? Jan 7, 2023 at 17:43

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