Reports in the press have disclosed that retail giant Primark has paid rent to some but not all of its landlords now that its stores across the UK have opened up after lockdown. 

Jonathan Fewster

Jonathan Fewster

Those landlords who have been paid have been asked to sign non-disclosure agreements (NDAs) preventing them from disclosing details of rental payments that have been made by Primark.

Shops, restaurants, pubs and hotels are now opening up, but due to a lack of trading during lockdown many tenants can only afford to pay rent to some of their landlords. We can expect to see NDAs being used more frequently as terms become more contentious about which landlords are paid rent.

NDAs are common in property transactions where sensitive transactions take place between parties. They are contractual agreements to share confidential information, and to keep that information confidential for a specified time.

NDAs are legally enforceable and a party can claim damages in the event of a breach. It is possible to obtain injunctive relief to prevent an anticipated breach, although this is often more difficult. NDAs are not enforceable where they seek to prevent disclosure of information relating to misconduct or breach of the law.

Parties often use an NDA to protect the exclusivity of an offer to the property market by way of a purchasing opportunity where they can demonstrate a loss to one of the parties if those confidential terms are disclosed. In certain circumstances, a seller will obtain a premium in offering an opportunity to a select number of parties with limited exposure to the market. Parties may pay more if they feel that they have a better chance of succeeding.

Primark is now using an NDA to prevent its landlords from disclosing to other landlords the rental arrangements that have been agreed regarding payment of the June quarter rent. For a landlord who finds that a rental concession has been revealed to other tenants there is no legal change in its position with other tenants; it is free to come to arrangements with tenants individually. Equally, a tenant’s position with other landlords remains unchanged and rent remains due. Other than a perceived loss of bargaining power, what is the quantifiable loss to a tenant on a breach of the NDA?

There are many questions that may be raised around NDAs but we expect them to become common place as landlords and retail tenants are forced into another round of negotiations for rental payments from June to September.

Jonathan Fewster is Head of Real Estate at BDB Pitmans LLP.