There can be unexpected complications when withdrawing a break notice.

For instance, suppose T serves a break notice. Subsequently, but still before the break date, T decides it still needs the premises (or agrees a lower rent with L). Clearly, T cannot withdraw the break unilaterally, but if agreement can be reached with L then they might both agree that the break notice is withdrawn and both parties are to proceed as if it had not been served. Unfortunately, the situation will not be as simply as that. Even if L and T agree to treat the break notice as withdrawn, it is still effective, and their conduct is deemed to create a new tenancy on the expiry of the break notice!

This somewhat bizarre rule is the consequence of Tayleur [1868] which seems still be good law. The key finding was that ‘the consent of the parties makes a new agreement, and if there is a new agreement there is a new tenancy created to take effect at the expiration of the old tenancy’. If that is correct, then there are potentially important implications:

the deemed new tenancy means that, from the expiry of the break notice, L can no longer claim against any former Ts (either liable under privity of contract for ‘old’ leases, or under an AGA for ‘new’ leases), or against a guarantor.

if L is itself a T, then by inadvertently creating a new sub-lease without the consent of its own L, it may be putting itself in breach of a covenant against alienation in its own headlease.

as far as dilapidations are concerned, any claim for disrepair arising under the previous tenancy is likely to be extinguished due to the deemed new lease. So, any opportunity L may have had of claiming against any previous Ts or guarantors for disrepair also disappears.

Whether Tayleur remains good law remains unclear (there are certainly arguments that can be raised against it). But, the best approach is probably to agree one of two work-arounds. One approach is for L and T to vary the lease to provide expressly that the break notice can be withdrawn unilaterally at any time prior to the break date, and have the party who served the notice simply withdraw it. The alternative is for L and T to agree that the lease is varied to make the break clause conditional on an act by the party serving the notice (eg T giving vacant possession on the break date, and with that party then deliberately not complying).

It is a complex issue and it is surprising that there is not more authority on the point. The key point, however, is to be aware of the problems that can arise if L and T agree that a break notice should be withdrawn. For the full complications see article in [2010] 246 PLJ 2.