Pub companies: follow-up - Business, Innovation and Skills Committee Contents

Supplementary memorandum from BBPA



  During the hearing of the Business, Innovation and Skills Committee "Pub Companies: follow up" on 8 December 2009 you promised to let the Committee have an explanation of the legal consequences of the new Framework Code of Practice (FCOP). This letter sets out our view of the legal position.

  The FCOP reflects an agreement between various parties to observe and carry out certain functions in relation to the letting of pubs. Those parties are the BBPA as an organisation, the members of the BBPA (insofar as they are concerned with the letting of pubs), the BII (who will undertake certain tasks under the FCOP) and the FLVA. The agreement between the parties is legally binding in the sense that any such contract would be. The effect of the FCOP is therefore that, as between the contracting parties, all BBPA members concerned with letting pubs are obliged to comply with its terms, one of which is an obligation to produce individual company codes of practice.

  These companies' individual company codes must reflect the terms of the FCOP. They must then obtain accreditation for their codes from the BII, and that accreditation must be maintained. The introduction of a code and the maintenance of accreditation are requirements of eligibility of membership of the BBPA, and non-compliant members can be expelled.

  Individual company codes are necessary first because companies must be given the freedom to compete by going further than the FCOP requires; and secondly because the FCOP cannot be directly relied upon by individual tenants or lessees, whose contractual relationship is with the company.

  Company codes will be signed by the pub company and the individual tenants or lessees, provided, of course, those tenants or lessees are prepared to comply with their terms. Tenants and lessees cannot be compelled to enter into this agreement. As well as new tenants and lessees, existing tenants and lessees will be invited to sign to the company code. In view of the fact that company codes will include obligations on the part of the tenant or lessee, the codes will constitute a legal contract between the parties, again enforceable in the way that such arrangements are usually enforceable.

  If, therefore, a company fails to comply with its own code, aggrieved tenants or lessees would, in principle, be able to complain to a court of law or other tribunal, such as an arbitrator if appropriate. However, an aggrieved tenant or lessee would first be able to make complaint to the BBPA, the BII or the FLVA, who would then consider the status of the relevant company's BII accreditation and BBPA membership. Such a complaint may itself resolve any difficulty.

  These arrangements should, therefore, secure access to the benefits of the FCOP for all tenants and lessees of BBPA member companies. Whilst the arrangements do not cover companies who are not members of the BBPA the BBPA believes that non-member companies will appreciate the value of a BII accredited code, and are therefore likely to fall into line.

  Finally, a particular question was also raised concerning upward only rent review clauses. We understand that it has been suggested that any lease containing such a clause may need to be amended by way of a Deed of Variation. The cost of this would not be necessary given the agreement that will exist between the company and the tenant/lessee based on the company code. Should the lessee want the additional protection offered by a Deed of Variation it is not unreasonable that such a cost be met by that licensee.

8 January 2010

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