Retail and commercial leases often have make-good clauses that oblige tenants to return the premises to their original condition at the end of the lease. However these clauses can easily lead to disputes when the parties have different understandings of what their exact obligations are, especially when costly fit-outs have to be removed or installed.

The consequences of failing to comply with such a clause were discussed in James v Hutton and J Cook & Sons Ltd [1950] 1KB9, where the court held that the landlord will normally be entitled to recover the amount it would cost to carry out the repair works. In order to avoid such a dispute, the lease should clarify what the exact make-good obligations are, including the state of the premises when it was taken over, what state the premises should be returned to and what fixtures and fittings the landlord wants removed or kept.

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