Lease Agreement

Querist : Anonymous (Querist) 03 May 2010 This query is : Resolved
Sir,
The company intends to enters into an agreement where the rent for the premises is agreed on a minimum guarantee fee. further it was agreed that in case the revenue from the buisness from the premises exceeds the minimum level than the proportionate revenue is shared between the party.
My Query : Can this type of agreement be called as Lease agreement.(where the rent is variable )
Regards,
arunav pankaj

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A V Vishal (Expert) 03 May 2010
An instrument of lease must contain the duration of the lease, the time of commencement, the amount of rent or premium, if any, the time of payment and the covenants between the lessor and the lessee upon which the lease should be granted.

The above essentials are definite, however, in your case the lease rent is not definite it looks more like a royalty contract (Royalty is a payment made to an other party under which an agreement has been signed between two parties on a mutual agreement. The Royalty will be paid on the agreed value, even if the agreed value is not achieved then the party has to pay the amount to the other. If it exceeds then the amount has to be paid for the actual value.)

Heaven 2011 (Expert) 04 May 2010
Dear Mr Pankaj i find no harm in the above clause. Usually to secure the amount of rent a security deposit with or without interest may be deposited with the condition that on the expiry of the said agreement the said security deposit would be refunded. And so far as the revenue shareing is concerned is upto the discretion of the parties concerned. I think you want to mean that your rent amount is subject to the guarantee payment if it is so then it is quite o.k. even if the rent is variable.

Guest (Expert) 04 May 2010
THE COMPANY IS ADVISED NOT TO MIX UP ALL THINGS IN ONE AGREEMENT.
IT IS SUGGESTED TO MAKE A SEPERATE AGREEMENT FOR LEASE OF THE PROPERTY ON CERTAIN CONDITIONS.
AND ANOTHER AGREEMENT TO SHARE THE BENEFITS AS PER AGREED TERMS.
KINDLY SEND DETAILS FOR FURTHER HELP
THANKS.

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