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Gathering the Harvest

11 November 2010 / John Furber KC
Issue: 7441 / Categories: Features , Landlord&tenant , Property
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John Furber QC revisits authorised guarantee agreements

The decision of Newey J in Good Harvest Partnership LLP v Centaur Services Ltd [2010] EWHC 330 (Ch) is of practical importance to investors in commercial property. Where such property is let, its value is primarily determined by reference to the rent payable under the lease and the strength of the covenants ensuring payment of that rent. The Landlord and Tenant (Covenants) Act 1995 provides for the release of such covenants in certain circumstances and may also have effect so that some covenants, albeit freely entered into, may be void from the start. The Good Harvest case is concerned with the scope of these provisions. When it was last considered in this journal, an appeal was pending; that appeal has not been pursued, following a settlement, and the consequences of the decision should now be given further consideration (NLJ, 4 June 2010, p 791).

The difficulties and uncertainties relate to covenants given by guarantors. The position as to covenants given by a tenant is simple enough;

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