The development of renewal clauses in leases continues to pose problems for landlords and tenants. 6.3 The tenant who requests such an extension in writing to the lessor no later than 6 (6) months before the expiry of the tenancy period. The landlord will remind the tenant to exercise option 8 (eight) months before the tenancy period expires. The facts were that the parties had entered into a lease agreement for gas stations in Paarl. The lease began on December 1, 2007 and was initially scheduled to last five years, with an extension period of « 5 plus 5 years. » The rent at the beginning was 18,000 R 18,000 per month and increased by 8% per year over the initial period. If the tenant simply forgot to announce the extension, the lease will probably be taken over. Recent court decisions suggest that there is even a welcome point for the landlord to ask the tenant if he wishes to renew the lease if the deadline for termination of the extension arrives. However, if the tenant often pays his rent too late or has not complied with the tenancy conditions in another way, it is less likely that the court will grant relief. It was decided that an arbitrator would have been ill-equipped to fill in the gaps or resolve issues that the parties could not resolve. An arbitrator was certainly unable to enter into agreements that the parties themselves had not entered into and then require the opposing party to continue the current relationship.
Nor can the arbitrator simply invoke certain vague and ill-defined objective standards. In addition, as soon as the tenancy agreement is terminated by an exit of time, the tenant would be excluded from the invocation of the compromise clause. A renewal option in a lease agreement allows the taker to extend or renew a lease beyond its original terms. Leases can apply to both residential and commercial units. Renewal options are the most common in leases. However, they can be included in any type of financial agreement in which a company can benefit from a long-term extension of the agreement. The Tenant exercised the option effectively during the initial period and renewed the tenancy agreement for a further five years. The lessor submitted that the amount of rent for the extension period was neither determined nor determinable; that the corresponding provision of the extension clause is « an approval agreement » and is therefore not, by undetermined, an agreement; and that the parties were not required to negotiate in good faith or reach an agreement on an objectively reasonable amount of rent.
With regard to the clause on the definition of the terms and conditions that would apply to the renewal of the lease, it is worth mentioning the corresponding text, since many leases contain provisions to this effect: renewal options can also be important for negotiation in business contracts. Companies that regularly offer goods or services under a third-party vendor agreement may wish to include a renewal option in their trade agreements to support long-term work. « While the position on « good faith agreements » in Australia remains complex in light of the Coal Cliff Collieries, courts, like other similar jurisdictions, will not apply « an agreement to accept. » It also corresponds to the position of our law. « If rental and escalation rates are not set until the beginning of the extension period, the following rent must be paid until the final setting of the new rent and price if appropriate rent adjustments are made retroactively: the rent payable for the month immediately preceding the date of the renewal date degenerates by [X]% and , subsequently, an annual increase on each anniversary date of the renewal period at a rate of [X]% per year. » In this case, in certain circumstances, the conduct of the parties determines whether the lease was implicitly extended.