Break Clause in UK Contracts: What It Means & Example Wording

When to Include a Break Clause

• In long-term fixed-term contracts where the parties want certainty of a minimum period but also flexibility to exit if circumstances change
• In commercial leases where the tenant may need to downsize, relocate, or close a location during the lease term
• In service and outsourcing agreements with terms of 3+ years where business needs may evolve

Example Wording

This example wording is illustrative only. Customise it to your specific circumstances and consider seeking legal advice.

Is a Break Clause Enforceable in the UK?

Break clauses are enforceable in the UK, but they must be exercised precisely in accordance with the contractual requirements. Courts interpret break clauses strictly. In the property lease context, the Supreme Court has confirmed that conditions attached to a break must be exactly complied with — in Avocet Industrial Estates LLP v Merol Ltd [2011], the failure to pay a trivial sum rendered the break notice ineffective. Any conditions precedent (such as being up to date with payments, not being in breach, giving vacant possession) must be fully satisfied.

Common Mistakes

• Serving the break notice late or in the wrong format — break notice requirements are interpreted strictly, and a notice served even one day late will be ineffective
• Failing to comply with break conditions — if the break is conditional on all rent being paid up to the break date, even a small underpayment can invalidate the break
• Not specifying whether the break is mutual or one-sided — a one-sided break right (e.g., only the tenant) is commercially different from a mutual break right