Early termination of rental agreement because of the company’s insolvency
Under Italian Law, the rental agreement usually indicates its expiry date.
In addition to the right of the parties to terminate the contract, at any time, however, Italian law provides that the lessee may also withdraw, on a unilateral basis, at any time.
It is necessary, nevertheless, to give a six-month notice, in case of serious grounds for termination.
The Italian Supreme Court recently included among these serious grounds the possible insolvency of the company of the lessee, in the case of rent for a non-residential purpose (judgement no. 5803/2019). In particular, the case at issue concerns the initial insolvency of a company forced to withdraw from the rental agreement, which was then not recognized by the lessor.
The Italian Supreme Court replied highlighting that the reasons justifying the early termination must be determined by unpredictable facts not depending on the will of the lessee and also occurred after the execution of the rental agreement. Therefore, it is necessary that the reasons are determined by objective causes.
In this case, the Italian Supreme Court recognized the existence of these requirements, in relation to the initial insolvency of the company, qualifying it as one of the serious grounds for early termination of the rental agreement.