The basic definition of a lease agreement is one where a lessee gets the temporary use of the object in return for payment of rental to the lessor. By this definition, part of the essentialia (essential terms of the contract) include temporary use and enjoyment of the object/res (rights of a beneficiary to the fruits of the leased object may be catered for) and rental to the lessor. What is meant by temporary use and enjoyment of the object includes using the object, such as leasing an entire house or leasing a partial part of a whole for instance leasing a room. In your lease agreement, you must indicate whether the property you are leasing is certain or at the very least ascertainable and this depends on interpretation. The law and rules surrounding movable objects and immovable objects are for the most part fairly similar with some logical differences.
What does it mean to have temporary use and enjoyment of a leased property? This is the right to use and enjoy the leased object and its fruits. The lessee does not have the right to destroy the property or to sell it as this is not a right afforded in terms of a lease contract. This is the reason why mining contracts are often not considered true lease agreements, given that you can mine on the property and take what you get and consume it. If the proper and strict definition of a lease is followed such a mining contract would not meet a lease agreement’s requirements. Further, a defining feature of a lease agreement is that it is the temporary use and enjoyment of the leased object and not permanent use and enjoyment.
In terms of duration, it is important to note that the duration of the lease is not an essential term of the lease agreement which means if a lesser and lessee have not agreed on a period it does not mean that the lease agreement is void, it just means that the lease is for an indefinite period though this is not recommended. For example, if your lease agreement says that the lease period runs from 2016 to 2018 then the point of departure is that the lease cannot be cancelled before the end of 2018 unless there is a breach / a cancellation clause stipulating reasons for resiling the agreement. The maximum term allowed for a fixed-term contract in terms of section 14 of the Consumer Protection Act 68 of 2008 is two years unless the consumer expressly agrees to a longer period and the supplier can show an obvious financial benefit to the consumer in having this long term. This does not apply to fixed-term contracts between juristic persons.
The rules for cancellation in terms of indefinite periods for leases include a period of notification of cancellation and are determined in the way in which rent is paid – for instance, if you pay rent every week then a week’s notice must be given where yearly leases must be afforded a three-month notice period.
Enduring lease agreements at the will of the lessor or lessee are not advisable, this is where one of the contracting parties has the power to determine how long the lease will endure and is rare as it gives all the power to one of the parties. It is also important to be aware that the way duration bends on the will of one of the parties automatically ends on the death of the lesser (if at his will) or the lessee (if at his death). The reason for this is because at death you cannot have a will anymore which is contrary to the point of departure because in any other lease agreement upon the death of one of the parties’ rights pass to their heirs. There is also no such thing as a lease in perpetuity because the idea of a perpetual lease contradicts the notion of “temporary”.
If you need any help on lease disputes do not hesitate to contact us to assist you.