Shopping centre rules and a commercial lease agreement

Key information for tenants of premises in a shopping centre

• Shopping centre rules are generally binding on the tenant if they have been effectively incorporated into the lease agreement or if the tenant has undertaken in the agreement to comply with them.
• The rules may govern not only organisational matters, but also the premises’ opening hours, deliveries, adaptation works, advertising, promotional campaigns, use of common areas and liability for damage.
• The tenant should verify whether the landlord or centre manager may unilaterally amend the shopping centre rules and whether such amendments may increase the tenant’s costs.
• The rules should be consistent with the lease agreement, the tenant’s business model and the method of settling service charges.
• A breach of the rules may result in contractual penalties, demands to remedy the breach, restrictions on the tenant’s rights and, in extreme cases, termination of the lease agreement.
• For restaurants, service premises, medical facilities, pharmacies, chain stores and franchise premises, particular attention should be paid to delivery arrangements, back-of-house facilities, displays, marketing, noise, odours and safety requirements.

What are shopping centre rules?

Shopping centre rules are a document setting out how the property is to operate and how premises may be used, including common areas, technical and back-of-house facilities, car parks, delivery routes, goods lifts, loading bays, storage areas, circulation routes and the centre’s infrastructure.

From the tenant’s perspective, the rules are not merely an organisational document, as they create genuine contractual obligations. A breach may result in contractual penalties, a demand to remedy the breach, liability for repair costs, restrictions on specified rights and, in extreme cases, even termination of the lease agreement.

For precisely this reason, the shopping centre rules should be reviewed together with the lease agreement before it is signed. This is particularly important for long-term leases of retail, restaurant, service, medical, beauty, entertainment and franchise premises, because the rules may materially affect how the tenant is able to operate from the premises.

Why are the rules particularly important when leasing premises in a shopping centre?

Leasing premises in a shopping centre differs from leasing a high-street unit or a standalone service unit. The tenant operates within a larger commercial ecosystem in which one tenant’s activities affect other tenants, customers, the centre manager, the property owner, security staff, suppliers and service providers.

For this reason, the rules usually set out not only general standards of conduct, but also detailed obligations relating to the day-to-day operation of a retail or restaurant business. Documents used by shopping centres commonly include provisions requiring the space to be used for its permitted purpose, prohibiting interference with other businesses, allocating responsibility for securing the premises, requiring order and cleanliness, regulating the removal of equipment and requiring the premises to be returned without deterioration beyond normal wear and tear.

The rules may specify, among other matters:

• the opening hours of the premises and the obligation to trade during the centre’s opening hours,
• rules for using the shopping centre’s common areas, car parks, lifts, loading bays and technical corridors,
• rules governing deliveries, loading and unloading, waste collection and the use of back-of-house facilities,
• requirements concerning advertising, signage and shopfronts, stands, screens and displays,
• obligations relating to cleanliness and safety, fire protection and evacuation,
• rules for carrying out renovation, adaptation and fit-out works,
• restrictions concerning noise, odours, music and promotions, tastings and events,
• obligations concerning insurance, protection of property and liability for damage,
• procedures for contacting the administration, security staff, the centre manager and technical service providers.

For the tenant, this means that the rules may directly affect day-to-day operations, operating costs and, potentially, the risk of a dispute with the landlord.

Shopping centre rules as an appendix to the lease agreement

Most commonly, shopping centre rules form one of the many appendices to the lease agreement. The lease then contains a clause under which the tenant undertakes to comply with the rules, technical instructions, fit-out and adaptation rules and other requirements applicable within the centre.

It is worth checking whether the lease clearly specifies:

• which version of the rules is binding on the tenant,
• whether the rules were provided to the tenant before the agreement was signed,
• whether the rules may be amended unilaterally by the landlord or centre manager,
• whether an amendment requires the tenant to be notified sufficiently in advance,
• whether an amendment may impose new costs on the tenant,
• what happens if the lease agreement conflicts with the rules,
• whether a breach of the rules may result in a contractual penalty or termination of the lease agreement.

As with other elements of the lease, the shopping centre rules should be reviewed before the agreement is signed, rather than only when a dispute with the landlord has already arisen. In practice, the provisions of the rules may affect the tenant’s day-to-day operation within the shopping centre.

May the landlord unilaterally amend the shopping centre rules?

Commercial lease agreements often provide that the landlord or centre manager may amend the shopping centre rules. Such a right is not necessarily problematic in itself, because a shopping centre must be able to respond to organisational, technical, safety, legal or sanitary changes.

In practice, the problem arises where an amendment to the rules may materially worsen the tenant’s position, increase its costs or restrict its ability to operate, without any protective mechanism. Particular caution is required where the landlord may unilaterally introduce new charges, change delivery hours, restrict access to back-of-house facilities, alter technical standards or modify advertising rules without any meaningful input from the tenant.

If an amendment affects the charges payable by the tenant, it should be assessed together with the provisions governing rent and service charges. Similar practical risks arise in mechanisms such as rent indexation in a commercial lease agreement, where a provision that appears merely technical may materially affect the total cost of the lease.

The tenant should seek to ensure that amendments are permitted only to the extent reasonably justified, are communicated in advance and do not circumvent the terms of the lease agreement. The agreement should also state that amendments to the rules may not impose new material financial obligations on the tenant without its consent.

Opening hours of premises in a shopping centre

One of the most important elements of shopping centre rules is the opening hours of the premises. In many shopping centres, tenants are required to remain open throughout the centre’s trading hours, even on days when turnover is low or customer numbers are limited.

A breach of the obligation to open the premises may result in contractual penalties. This is particularly relevant to retail, restaurant and service premises that contribute to the attractiveness of the centre as a whole.

Before signing the agreement, the tenant should therefore review the rules and determine:

• whether the tenant must operate during all of the centre’s opening hours,
• whether exceptions apply on public holidays, Sundays, during renovation works, breakdowns, staff illness or force majeure events,
• whether the premises may be temporarily closed after prior notice to the centre manager,
• what penalties apply if the premises are not opened,
• whether the landlord may unilaterally change the centre’s opening hours,
• whether extended opening hours generate additional costs for the tenant.

For a tenant operating a restaurant, medical practice, specialist business or service outlet, a requirement to fully align its hours with the centre’s opening hours may constitute a significant organisational constraint.

Deliveries, parking, back-of-house facilities and common areas

Shopping centre rules usually regulate in detail deliveries and the use of service roads, goods lifts, loading bays, storage areas, back-of-house facilities, technical corridors and parking. These provisions have practical significance from the first day of operations.

The tenant should check whether the rules reflect the specific nature of its business. A clothing store has different requirements from a restaurant, pharmacy, health and beauty store, beauty salon, gym, medical facility, showroom, service point or click-and-collect retailer.

Particular attention should be paid to provisions concerning:

• delivery hours and the possibility of deliveries outside the centre’s opening hours,
• use of the car park by customers, suppliers and the tenant’s employees,
• storage of goods, packaging, pallets and ancillary materials,
• waste disposal, including food, packaging and special waste,
• deliveries of chilled products, food, medicines, cosmetics or materials requiring special conditions,
• the prohibition on obstructing circulation routes, evacuation routes and common areas,
• liability for damage caused to common areas, lifts, loading bays, doors, flooring and installations.

For restaurant tenants, shopping centre rules are particularly important because they may govern food deliveries, waste collection, use of back-of-house facilities, odour emissions, music, ventilation and common areas. Similar organisational issues arise under a restaurant garden lease agreement, where the use of space outside the premises should be regulated precisely.

Promotional campaigns and events within the shopping centre

In shopping centres, tenants often organise promotional campaigns, product presentations, tastings, seasonal events and temporary stands, as well as displays in the mall or activities in the car park. Such initiatives may increase sales and brand awareness, but they must comply with the centre’s rules and usually require the landlord’s or centre manager’s consent.

In practice, documents governing the use of shopping centre space may regulate event organisation in considerable detail. They may require the tenant to specify the area, timetable and coordinators, promotional obligations, event signage, use of the centre’s logo, public liability insurance, staffing, medical cover, required administrative approvals and restoration of the area after the event.

The tenant should pay particular attention to whether the rules or a separate event consent provide for:

• prior approval of the location, timing, nature and scope of the promotional campaign,
• a prohibition on activities that disrupt other tenants, customers or common areas,
• an obligation to secure the area, equipment, display elements and installations,
• an obligation to obtain administrative approvals, decisions, opinions from relevant services or the centre manager’s consent,
• an obligation to arrange public liability insurance, security, technical support or medical cover,
• rules for using music, marketing materials, individuals’ images and the centre’s logo,
• liability for personal injury and property damage arising in connection with the event,
• an obligation to dismantle equipment, remove materials and clean the area after the campaign.

Such provisions are particularly important for tenants operating in the retail, restaurant, sports, entertainment, events, beauty, medical or education sectors. In a dispute, the landlord may rely not only on the lease agreement but also on the centre’s rules, the event rules, technical instructions and correspondence concerning consent to use the relevant space.

Advertising, signage and the appearance of the premises

In a shopping centre, the appearance of the premises matters not only to the tenant but also to the commercial concept of the property as a whole. The rules therefore often set out requirements concerning signage and shopfronts, displays, stickers, screens, advertising stands, music, scents, promotional materials and marketing campaigns.

The tenant should verify whether it may freely use its visual identity and whether the design of the premises, advertising and shopfront requires the landlord’s approval. Clauses granting the landlord very broad discretion to approve advertising materials, without clear criteria or response deadlines, are particularly risky.

If the tenant’s business relies on a strong brand, a franchise system or consistent visual identity, the signage requirements should be reviewed before the lease agreement is signed.

Adaptation works, refurbishment and fit-out in a shopping centre

When leasing premises in a shopping centre, not only the centre’s rules but also the fit-out and adaptation rules are important. This document may regulate access for construction teams, protection of the premises, permitted working hours, technical documentation, inspections and acceptance, notifications, permits, contractors’ insurance and liability for damage.

The tenant should verify:

• who approves the interior design and fit-out plans for the premises,
• which technical documents must be submitted,
• whether the landlord may suspend the works,
• whether works may be carried out during the centre’s opening hours,
• who is liable for damage caused by contractors,
• whether the tenant must pay for technical supervision, security or additional utilities,
• whether delays in the works affect the date from which rent becomes payable,
• the procedure for acceptance of the premises after completion of the works.

If the tenant is responsible for preparing the premises for operation, the shopping centre rules should be reviewed together with the technical documentation and the provisions of the fit-out works agreement. This is particularly important where the commencement of business depends on timely completion of adaptation works, technical acceptance and the landlord’s approvals.

The parties should also determine in advance whether, after the lease ends, the tenant may claim reimbursement of its improvements, or whether it must leave them without compensation or restore the premises to their previous condition. This issue is discussed in more detail in our article on tenant improvements in commercial premises.

Tenant’s liability for damage within the shopping centre

Shopping centre rules often extend the tenant’s obligations relating to liability for damage caused within the premises, common areas, back-of-house facilities, car park or the centre’s infrastructure. Commercial documents may also provide that a party using the space is responsible for the preparation, organisation and conduct of an event, participant safety, personal injury and property damage, and the actions of persons engaged by that party.

The tenant should carefully verify whether it is liable only for its own acts and omissions or also for those of employees, customers, suppliers, contractors, subcontractors, franchisees, event participants and other persons present in the centre in connection with the tenant’s business.

In practice, particular attention should be paid to provisions concerning:

• damage caused by renovation teams, suppliers or subcontractors,
• damage to flooring, facades, lifts, doors, installations, the car park and common areas,
• contamination caused during deliveries, promotions or events,
• flooding of neighbouring premises, system failures or improper use of utilities,
• fire, breaches of fire safety requirements or obstruction of evacuation routes,
• an obligation to indemnify the landlord against third-party claims,
• an obligation to pay penalties, damages, repair costs, technical service costs and legal or administrative costs.

These provisions should be aligned with the tenant’s public liability insurance. If the rules impose broad liability, the policy limit should be proportionate to the actual risk associated with the business, its location and the scope of the tenant’s use of common areas.

In larger retail properties, the division of responsibilities between the property owner, centre manager and tenants is also important. From the landlord’s perspective, the shopping centre rules should therefore be consistent not only with the lease agreement but also with the model of commercial property management.

The tenant’s public liability insurance and protection of the landlord’s interests

Shopping centre rules and appendices to lease agreements often impose an obligation to maintain public liability insurance. The landlord seeks to reduce the risk that damage caused within the premises, common areas or in connection with the tenant’s business will remain uninsured.

The tenant should verify not only the obligation to maintain a policy, but also:

• the minimum policy limit,
• the scope of cover, including contractual and tort liability,
• whether the policy covers damage caused by employees, suppliers, subcontractors and works contractors,
• whether the insurance covers promotional campaigns, events, use of common areas and adaptation works,
• whether the landlord may require a copy of the policy before the tenant commences operations,
• whether the absence of a valid policy may result in a contractual penalty or termination of the lease agreement.

It is also worth checking whether the insurance requirements are proportionate to the actual scale of the tenant’s business. A clothing store, restaurant, fitness club, medical facility, children’s play centre and a tenant organising events within the centre will each require a different type and level of cover.

Contractual penalties for breaching shopping centre rules

In many commercial lease agreements, a breach of the shopping centre rules may result in a contractual penalty. The difficulty is that the rules often contain obligations of very different significance, ranging from essential safety requirements to minor organisational duties.

The tenant should avoid a situation in which every, even minor, departure from the rules may trigger a high contractual penalty. The tenant should seek to ensure that penalties are reserved only for material breaches, while less serious breaches may first be remedied following a written demand.

In particular, the parties should negotiate:

• a cap on the aggregate amount of contractual penalties,
• an obligation to issue a prior demand to remedy the breach,
• an exclusion of penalties for breaches not attributable to the tenant or caused by the landlord,
• proportionality between the penalty and the nature of the breach,
• a prohibition on imposing multiple penalties for the same event,
• a clear procedure for documenting breaches of the rules.

A breach of shopping centre rules may also create a risk of termination of the commercial lease agreement. The lease should therefore clearly identify which breaches are material and may justify more serious consequences.

Shopping centre rules and service charges

The rules may also affect the service charges payable by the tenant. This applies in particular to the use of utilities, air conditioning, ventilation, security, cleaning, parking, waste services, deliveries, additional technical services, goods lifts and the centre’s shared infrastructure.

The tenant should verify whether obligations arising under the rules result in hidden cost increases. For example, deliveries outside standard hours, renovation works outside the centre’s operating hours, non-standard waste, additional security, technical supervision or bespoke technical requirements may generate additional charges.

The lease should clearly state which costs are included in the service charge, which require the tenant’s separate consent and which may be charged only after prior notice. It is also important to determine whether the tenant has the right to verify the calculation of service charges and inspect the underlying documents.

If the tenant is in arrears under the lease agreement, the shopping centre rules may also have practical significance, for example in relation to access to the premises, equipment left behind or other property belonging to the tenant. This issue is connected with our article on tenant arrears in commercial premises and the right to retain property.

Confidentiality, logos, music and intellectual property rights

Shopping centre rules and supplementary documents may also contain confidentiality provisions governing the use of the centre’s logo, advertising materials, music, recordings, photographs, video footage, image rights and payments to collective copyright management organisations.

This is particularly relevant where the tenant organises events, promotional campaigns, shows, concerts, training sessions, tastings, broadcasts, influencer campaigns or marketing activities in the mall. In such cases, the rules may require the landlord’s consent, compliance with the centre’s event-branding guidelines, observance of rules governing the centre’s logo and confirmation that music, photographs and promotional materials are used lawfully.

If, during lease negotiations or the organisation of a promotional campaign, the tenant discloses confidential information to the landlord or centre manager, appropriate provisions concerning an NDA or confidentiality clauses in the lease agreement should be included.

Conflict between the rules and the lease agreement

In practice, shopping centre rules may be inconsistent with the lease agreement. This may concern opening hours, adaptation works, signage, delivery arrangements, contractual penalties, access to the premises, insurance obligations or additional costs.

The lease should therefore provide that if the lease agreement conflicts with the rules, the lease agreement prevails. The rules should supplement the organisation of the centre, but should not be capable of changing the fundamental commercial and legal terms of the lease in an uncontrolled manner.

This is particularly important in long-term leases, where an amendment to the rules after several years may have a genuine impact on the profitability of the tenant’s business.

Verdict Partners commentary

In commercial leasing, shopping centre rules may have considerable practical significance. They often determine how the tenant may actually use the premises, when it must open, how deliveries may be made, what works may be carried out, how the premises may be branded and which obligations must be fulfilled towards the centre manager.

The principal risk is not the mere existence of rules, because a shopping centre must have organisational standards. The risk lies in rules that may be amended unilaterally, impose additional costs, provide for high penalties for minor breaches or conflict with the tenant’s commercial operating model.

Before signing a lease agreement in a shopping centre, the tenant should therefore verify whether the rules are consistent with the lease, whether they unduly restrict the tenant’s business and whether they allow the landlord to change key terms of cooperation unilaterally. Reviewing the rules should accordingly form part of a broader review of the commercial lease agreement, covering not only rent, the lease term and security instruments, but also the practical conditions under which the tenant will operate in the shopping centre.