Side letters are a versatile tool in commercial property transactions, allowing landlords and tenants to document agreements that modify or supplement the terms of a lease.

Understanding the common uses and implications of side letters can help both parties manage their lease agreements more effectively.

Why do parties use a side letter?

Parties use side letters for various reasons, such as documenting temporary or personal arrangements, avoiding reworking approved documents or addressing last-minute changes. For example, a landlord may agree to accept monthly rent payments instead of quarterly payments, as required by the lease.

This arrangement can provide flexibility for tenants facing financial difficulties and help landlords maintain a steady cash flow. However, it is essential to ensure that the side letter clearly outlines the terms of the agreement to avoid misunderstandings and disputes.

When not to use a side letter

Side letters can be a convenient way to clarify or correct mistakes in a lease. Whether a side letter is appropriate depends on the nature of the mistake and its context within the lease. For example, side letters should not be used to extend the term of the lease or add additional property to the demise.

Instead, they can address minor errors or provide supplementary information. If the mistake is significant, the parties may need to consider rectification or other legal remedies, like the use of a Deed of Variation or even surrendering the agreement and entering into a new agreement that contains the correct agreed terms between the parties.

Registration of side letters

Side letters do not affect a registrable disposition and are not required to be registered at the Land Registry. This allows the parties to keep the contents of the side letter off the register.

However, whether a side letter is binding on successors depends on its construction rather than registration. A side letter may bind a buyer of the landlord’s interest if the benefit is not expressed to be personal to the landlord, even if the buyer is unaware of the side letter’s existence.

Binding successors

Determining whether a side letter binds successors involves a two-stage process:

1. Interpretation

The drafting of the side letter will indicate whether it is intended to be personal or to bind successors. If the side letter is clearly personal, it will not bind successors.

2. Transmission of covenants

If the side letter is intended to bind successors or is silent on the issue, the transmission of the benefit and burden of landlord and tenant covenants must be considered.

For new leases, covenants in a tenancy include covenants in a collateral agreement and bind successors, except for personal covenants. For old leases, covenants that “touch and concern” the land pass to successors.

Third-party implications

Whether a third party can enforce the side letter depends on its drafting. The relevant ‘rights of third parties’ legislation will apply, which can be of particular concern where associated companies might want to enforce the obligations in the side letter.

Key points to consider before entering into a side letter:

– 1. Personal or binding

Determine if the side letter is intended to be personal to the particular landlord/tenant or should bind their successors.

– 2. Legally binding

Ensure the terms of the side letter are intended to be legally binding on the parties.

– 3. Temporary variation

Clarify if the side letter documents a temporary variation and specify the duration.

– 4. Breach provisions

Define if the provisions of the side letter end if the tenant breaches any obligations under the lease or side letter.

– 5. Guarantor involvement

If there is a guarantor to the lease, they should also sign the side letter.

– 6. Lender consent

If the landlord’s property is subject to a charge, the lender should consent to the side letter.

Side letters are a valuable tool for landlords and tenants to manage and modify lease agreements. However, if not drawn up with the correct level of care, they can leave the parties trying to unscramble a confusion or to enforce a loosely attempted contractual relationship.

If you require further guidance regarding the use of a side letter or on commercial leases in general, please contact us to speak to a member of our Real Estate team.

Denmark has just made history by becoming the first European country to grant its people copyright protection over their own likeness – their face, body, and voice. In a digital driven world, where deepfakes are becoming alarmingly convincing, this new legislation gives individuals more control by providing the right to demand takedowns and seek compensation if their image is used without consent. In short, you own the rights to your own face.

Deepfakes: From Funny to Frightening

The law comes as a reaction to the increased use of deepfakes – AI-generated videos impersonating individuals using their publicly available personal data. While some might be good for a cheap laugh (light-hearted AI adaptations of yourself or your friends), the darker side is far less amusing. Deepfakes have been used to spread disinformation, harass individuals, and undermine trust.

Denmark has decided enough is enough. Under the new framework, if someone creates a fake video of you spouting nonsense, you can get it taken down and, potentially, collect damages. At the same time, satire and parody are safe – hoping to protect the creativity of comedy.

How does the UK do it? 

In the UK, our legal protection against deepfakes is, frankly, a bit patchy. Public figures may have the resources to be able to rely on defamation or privacy rights, but for most of us, it’s not so easy to defend yourself against this risk. 

Many people assume that “image rights” already fall neatly under intellectual property law. After all, we talk about owning our likeness in the same way we talk about owning a logo or a piece of music. But that’s not quite true. In the UK, your image is primarily protected through data protection and privacy law, not intellectual property rights. 

That means remedies are often more about how your data is used than about owning the rights to your face in a legal sense. This is what makes Denmark’s move so interesting -it reframes image and likeness as something closer to copyright – a clear, transferable right – rather than leaving it tucked away under privacy legislation. It’s a subtle but important shift that could make enforcement much simpler for individuals.  

Time for the UK to Step Up? 

Denmark has set the pace. The UK faces a choice: wait and see how much damage deepfakes can cause domestically, or (attempt to) get ahead of the curve with legislation that protects people from the start. It’s not just about preventing embarrassment online; it’s about safeguarding dignity, trust, and truth in an era where seeing isn’t always believing. 

It has been reported that Claire’s is due to call in administrators for its UK and Ireland business, putting around 2,150 jobs at risk. 

When a company becomes insolvent, one option is to sell it in whole or in part as a going concern. However, purchasing an insolvent business comes with unique legal and operational challenges, particularly in the area of employment law. 

TUPE and Insolvency

When buying an insolvent business, understanding obligations toward employees under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) is crucial. While insolvency can modify TUPE’s application, employee rights are still largely protected.

Failure to manage employment risks properly can lead to significant liabilities and legal disputes after the acquisition.

How TUPE Works

Employees assigned to the business automatically transfer to the buyer on their existing terms and conditions.
Continuity of employment is preserved, even in insolvency cases.

Exceptions Under Insolvency

Regulation 8 provides exceptions where the company is in bankruptcy or similar proceedings aimed at liquidation; TUPE does not apply.
For businesses in administration or a Company Voluntary Arrangement (CVA), TUPE generally applies but may have modifications.

Modified TUPE Rules in Administration

When TUPE applies during administration, the buyer inherits employees, but certain liabilities can be limited.

Arrears of wages, holiday pay, and other debts may be covered by statutory schemes rather than the buyer.
There is greater flexibility to modify employee terms under relevant insolvency proceedings, but only within strict legal limits.

Pre and Post-Transfer Dismissals

Buyers must be cautious about dismissals around the time of transfer:

Dismissals solely due to the transfer are automatically unfair.
Valid Economic, Technical, or Organisational (ETO) reasons, such as redundancy, may justify changes.

Information and Consultation Obligations

Even during insolvency, employers must:

Inform and sometimes consult employee representatives about the transfer.
Failure to comply can result in protective awards up to 13 weeks’ gross pay per employee.

Liability can be joint and severable, meaning buyers could be responsible if the seller is no longer in existence.

Due Diligence and Risk Management

Thorough employment due diligence is essential when purchasing an insolvent business. Buyers should identify:

Transferring employees and their terms
Outstanding liabilities (e.g., unpaid wages, accrued holiday)
Pension obligations
Ongoing disputes or tribunal claims
Whether TUPE applies and under what conditions

Conclusion

Employment law can make or break the success of purchasing an insolvent business. Early legal advice, thorough due diligence, and a clear understanding of TUPE in insolvency contexts are essential to minimise risk and ensure a smooth transaction.