Commercial leases and management agreements


A commercial lease is an agreement between a lessor and a lessee to occupy or use a facility for a purpose related to business. The lessee will have exclusive rights to the property for a fixed period. 

A commercial lease agreement imposes significant obligations on all parties. Therefore, proper due diligence, understanding terms, conditions, rights and conditions, and attaining the advice of a commercial lease lawyer is paramount.

Essential Characteristics

For a commercial lease agreement to bind all parties, it must contain the following elements:

  1. Offer: An offer could be defined as an express willingness to enter into a contract of agreed terms. Offers are accompanied with the intention of making the agreement binding as soon as the offer is accepted by the person to whom it is addressed;
  2. Acceptance: This is an unequivocal statement that the lessee agrees to the offer;
  3. Intention to create legal relation: Both the lessee and the lessor must intend to enter into a legally binding contract; and
  4. Consideration: Consideration is the price demanded by the lessor in exchange for the promise of service to be provided to the lessee.

Breaches of contract can have significant ramifications and may even lead to costly and lengthy litigation. Therefore, the parties must understand their rights and responsibilities to avoid contractual breaches. 

Main Issues to Consider

When drafting a commercial lease agreement, the following elements should be considered:

  • Details of the lessor, lessee and premises 
  • Term of the lease
  • Lease amount or ‘rent.’
  • Permitted use
  • Trading hours
  • Common areas
  • Maintenance and Repairs
  • Renewal
  • Subletting and assignment
  • Dispute resolution.