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Lease-management of goodwill: rental companies, be careful what you rent!

Mauritian commercial law has recently seen an important innovation with the creation of the legal concept of goodwill (in this regard, see our article entitled “Reform of the Commercial Code of Mauritius” about The Code of Commerce Amendment Act 2018).

This new concept has been accompanied by a new legal framework on the lease of goodwill, or in other words “lease management”.

The legal interest of these new rules is twofold:

– on the one hand, a rental management must be published in a newspaper and with the Registrar General within fifteen days of its signature; and

– on the other hand, specific rules concerning the sharing of responsibility related to the management of the fund between the owner and the tenant are defined.

The companies which rent a set of tangible and intangible movable elements, which takes part in a commercial exploitation and which have the essential aim of satisfying the need for the customers (ie the general definition of the goodwill) therefore have every interest in wondering if this set of goods is not legally qualified as goodwill. This would imply that they are in a lease-management situation, but this type of contract did not exist as a legal concept before. In this way, some rental companies do not know that their contract is now the subject of such a regime, despite the important consequences that may ensue.

Indeed and in principle, the landlord is responsible with the tenant-manager for debts contracted by him for six months from the publication of the contract (article 151 of the Commercial Code). However, if by derogation this last provision does not apply to lease management agreements which were concluded before the entry into force of the amendments to the Commercial Code (i.e. before April 5, 2019), this is on condition that these contracts have been published within three months of this date of entry into force (Article 4 (2) (b) of The Code of Commerce Amendment Act 2018).

The publication is therefore urgent for the owners who have not yet done so: they are still responsible for the debts contracted by the tenant for the exploitation of the fund.

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