What is a renewal clause?

A commercial lease can contain one or several clauses by virtue of which we will grant to the lessee the right to exercise a renewal of the lease for one or more specific periods, according to the terms and conditions already determined. It is appropriate, for the lessee, at the time of the negotiation, to be very specific as for the terms of renewal. The courts have decided that a clause mentioning that the amount of rent which will be determined according to the market price, was difficult to apply, otherwise not applicable, and that if the parties cannot agree, it was then not appropriate to renew the lease.

When there is a renewal clause, the manner of renewing the lease has to follow accurately the method described in the lease. Failure to submit to it, the renewal could be considered as invalid.