The Ministry of the Interior sent its order of 29 March 2020 to the governments of all EU states and territories to take the necessary measures to ensure that landlords forfeited the rent of workers, including migrants, for a period of one month. However, if one can recognize the weight of the potential monetary burden (for donors) and the counter-reaction of the real estate community, such a measure would result in governments not yet issuing an order or notification providing for the same thing. Even if governments did the same, they would do nothing to ease the burden on businesses through commercial leasing and licensing agreements. Therefore, if the agreement itself does not contain force majeure clauses strict enough to allow the tenant or licensee to obtain a waiver of the lease, there is little more than to terminate the contract. If the agreement allows the lessor or licensee to terminate it with a minimum notice period, it is a dream come true. However, termination of the contract during a blackout period is a common problem faced by tenants in commercial agreements. Such an action may involve its own consequences, including the payment of rent for the remaining prohibition period, which can also be recovered from the landlord of all deposits that the tenant has deposited with him, including in a licensing agreement. Faced with these problems, the importance of terminating these contracts is much greater now that companies are facing abysmal incomes and continue to be penalized by their rent obligations. Sudip Mullick, partner, Khaitan Co, said that the key is the agreement and communications of the government on the deferral or non-payment of rent by tenants are mainly moral obligations and no legal obligations. The blockage has caused shockwaves across the economy. People`s ability to spend money is not what it used to be. This has also increased considerably on the relationship between owners and owners.
While tenants` rental capacity has been affected, the profitability of landlords has also been disrupted. Tenants are asking for a rent waiver because they were unable to access their premises or because their income was affected. The best way to deal with this situation would be for both sides to sit around a table and come up with a viable solution to address this unprecedented situation by deferring the payment of the levy by a few months until the blockage is lifted. (b) reduction of the levy for a few months by adjusting the same levy due in the future royalty due, c) payment of the levy suspended in the coming months in passable staggered payments, (d) adjustment of the deposit levy with an increased understanding of the repayment of the deposit at a later date, etc., can help to reduce the burden on the underwriters while guaranteeing the inflow of revenue to the licensees. But as we also discussed in our letter here, the defence of frustration is not easy to win. This involves its own challenges and involves a very high threshold of proof – the evidence of the total frustration of the treaty may not be very simple, given the uncertainty of these times. Restrictions are lifted and imposed every two days, making it difficult to assess whether it is really impossible to meet its contractual obligations. It therefore depends on the specific terms of the contract and how the court sets out the applicable conditions of the blockage and its sustainability to justify the impossibility of delivery.