Bulgaria: decision of the Supreme Court regarding termination of a lease agreement because of an economic adverse change
By Dimitar Vlaevsky
In its decision (No. 24/2nd commercial department) of 12 September 2013, the Supreme Cassation Court of Bulgaria comprehensively expressed its opinion on the substantive legal aspects of the economic adverse change clause and ruled on the termination of a lease agreement on this ground. According to the decision, a fundamental change of the circumstances could lead to early termination of an agreement if such change was not caused by any of the parties and neither of them was able to predict it at signing, as well as if further force and effect of the agreement are contrary to the principles of justice and the bona fide rules. The decision is of major importance, since it marks the first time that a long-term lease agreement has been terminated by court ruling due to an economic adverse change.
The Bulgarian Supreme Cassation Court (the Supreme Court) dealt with a case in which the plaintiff (the lessee) and the respondent (the lessor) had in April 2007 signed a lease agreement for a 34m2-sized shop located in a shopping mall in Varna (the second-largest city in Bulgaria, situated at the Black Sea). The term of the lease agreement was set for 10 years. Until the summer of 2008, the leased shop had sufficient turnover. However, due to the global financial crisis, the turnover of the shop decreased rapidly. Thus, the shop’s turnover for the entire year 2008 was €13,000 (£10,700), compared with a total €6,000 for just the two months of November and December 2007. Given that the agreed monthly rent of the leased shop was €2,100, the lessee requested a decrease in the rent. The negotiations with the lessor failed and the lessee was forced to close the shop (with the rent agreement still being valid and effective).
Subsequently, the lessee brought an action against the lessor and sought the court to terminate the lease agreement on the grounds of an economic adverse change…
Click on the link below to read the rest of the Schoenherr briefing.
Sign in or Register to continue reading this article
It's quick, easy and free!
It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.Register now
Why register to The Lawyer
In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.
Identify the major players and business opportunities within a particular region through our series of free, special reports.
Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.
More relevant to you
To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.
News from Schoenherr
Briefings from Schoenherr
Romanian authorities have published a draft law on the safety of offshore oil and gas operations.
The profession is divided about the two possible interpretations of the new law.
Analysis from The Lawyer
Regulators are ramping up the pressure in the aftermath of recession, leaving firms to compete for compliance and restructuring work