The effects of the penalty clauses applicable to the early termination of lease agreements for comercial prenises. Analysis of the Supreme Court judgment of April 3rd, 2018

Abstract

The  Supreme Court’s  judgment of April  3rd,  2018,  has  upheld the claim  of the lessor of a comercial lease agreement, condemning the lessee, who  had unduly early-terminated the  lease, to pay entirely  the  penalty  agreed for this  breach of contract. This  judgment dismisses arguments seeking  the reduction of the penalty which had  been  upheld by the  dominant previous case  law.  The  analysis made  by the  Supreme Court  in  this  case,  confirming the  full  effect  of the  penalty, might be invoked by  lessors  in  numerous cases  in  the  future, for  the  penalty  clause  which has  been  analysed is  typical  in  comercial lease  agreements. This  paper  examines the  keys  of this  case law  and  why  the  lessor’s position in  these  disputes is stronger after this  judgment.