If T has a break clause in the lease, than in the current market there is a considerable likelihood that it will be exercised. Needless to say, Ls adopt a strict approach when served with break notices under such clauses. 


No doubt L will check that the notice has been served correctly; remember, it was said in Mannai [1997] that any precondition must be complied with (eg if the lease says the notice must be served on pink paper then indeed it must be served on pink, not blue, paper!). Secondly, L will no doubt check the timing of the notice to ensure that this has also been strictly complied with. Thirdly, L will want to be certain that all the existing lease provisions have been complied with – no doubt L will respond with a comprehensive dilapidation schedule and argue that T is in breach of repair and decoration obligations, and L will also insist that rent is paid fully up-to-date. 


Consider the position where a lease was granted on 1 November with the break clause being on the fifth anniversary of that commencement date (ie also on 1 November). Rent is payable on the usual quarter dates (25 March, 24 June, 29 September, 25 December). On 29 September, T will therefore have to pay the full quarter’s rent, through to 25 December. What T cannot do is pay the rent from 25 September to 1 November (Re A Company [2006]). Note that if T does not pay the full quarter’s rent then L may be able to argue that the rent has not been paid in full, and thus all terms of the lease have not been complied with (and accordingly the break notice is invalid). Clearly, T will not want to take a chance on that argument! 


There can also be problems if the lease gives T the right to break on the same day as a rent payment day (typically a quarter day). L will argue that the rent falls due on that day and will be payable even though the lease expires on that day and the question will then be whether the term ended before the obligation to pay the next rent instalment arose on the same day? There is no legal authority on the point, and it is open to argument (but will T really want to risk the point?). Accordingly, the best advice when agreeing the terms of a new lease is to insist that the break date is the day before any rent payment date. Alternatively, have a clause making it clear that rent is to be apportioned when the lease is terminated by a break notice, or include an obligation on L to repay any rent paid for a period following the expiry of the term. Source: Morgan Cole.