Lease Agreement Termination and Unilateral Termination

Among these, special rules are provided for unilateral termination and for termination of non-execution, regulated in the Civil Code at articles 1816 and respectively 1817.
Definition of Lease Agreement
Lease Agreement is defined as the convention between two parties, whereby a party, called the Lessor, undertakes to provide the other party, called a Lessee, the use of a good for a certain period, in exchange for a price called rent.
The definition is regulated by the Romanian Civil Code and it highlights the essential elements of the lease, namely the use of a good, the limited duration of use and the price of use, called rent. Even though, according to the text, the transmission of the use is made “for a certain time”, the Civil Code (articles 1783 and 1785) agreed the practice according to which the duration of the lease can be determined or for an undetermined period.
Termination of the Lease Agreement
According to art 1817 of the Civil Code, termination may occur when, without justification, one of the parties to the lease agreement fails to perform the obligations arising out of the contract. In this situation, the other party has the right to terminate the lease with damages, if any.
As a rule, the termination of the lease for non-performance of a contractual obligation must be based on failure to fulfill a principal obligation (for example, change of destination of the good, non-payment of rent, etc.) rather than a slighter obligation. As an exception, in the case of successive contracts, the creditor has the right to termination, even if the non-execution is of minor importance but has a repeated character.
Termination must be ordered by the court, but it may also operate lawfully if the parties have stipulated an explicit contractual clause in this respect.
Unilateral Termination of the Agreement
The unilateral termination of the lease is another option of terminating the lease agreement provided by art. 1816 of the Civil Code. According to this provision, the termination of the contract may also be declared unilaterally by the entitled party by written notice when one or more of the following conditions are met:

  • the parties have agreed so;
  • the other party is deemed in default automatically;
  • the other party has not fulfilled the obligation within the time limit set by the delay;

In case of contracts with successive or continuous enforcement, if the right of unilateral termination “has been recognized by one of the parties”, it may be subject of execution followed by a reasonable period of notice. It is very important to mention that the unilateral termination in this case does not have effect over the already executed part of the agreement.
The agreement concluded for an indefinite period of time may be unilaterally terminated by either party, subject to a reasonable period of notice. By adopting this general rule, “if the lease was made without a determination of the duration, either party may terminate the contract by notice”. Thus, as an exception to the termination of the contract by mutual consent, the lease may also cease by manifesting the will of a single (and any) parties.
The aforementioned exception does not apply in the case when the parties did not stipulate the duration of the lease agreement but in the same time they do not intend to conclude the agreement for an indefinite period of time. However, this situation is regulated in art. 1785 of the Civil Code which clearly provides that the lease is concluded:

  • for one year, in the case of unfurnished dwellings or premises for the activity of a professional;
  • for the duration for which the rent was calculated, in the case of movable property or of the furnished rooms or apartments;
  • during the lease period of the immovable property, in the case of movable property made available to the lessee for the use of a building.

It should be emphasized that the right to unilaterally terminate the contract is a non-standard clause according to art. 1203 of the Civil Code, which means that the clause will only have effect insofar as this clause is expressly accepted in writing by the other contracting party. If the clause of unilateral termination of the contract was not expressly accepted by the other contracting party, that clause will not be effective.

Contact an Advisor

If you have any questions regarding this topic and how it might have an impact on your business, please contact the Mirus Consultant with whom you regularly work, or:

Irina Craciun

  • Legal Contributions
  • Bucharest
  • +40 724 000 173