Continuous operation clause: sample and the go dark right

Sample clause

Written for lease of a pharmacy anchor at Ridgeview Commons, a fictional shopping centre in Boise, Idaho.

Operation. (a) During the first 5 Lease Years, the Tenant must open the Premises for business during the Centre's core trading hours, keep them fully stocked and staffed, and operate under its usual trade name. (b) After the fifth Lease Year, the Tenant may cease operating in the Premises, provided it gives the Landlord 90 days' written notice and continues to pay Rent and perform its other obligations under this Lease. (c) If the Tenant ceases operating for more than 120 consecutive days, other than for repairs, casualty or events beyond its control, the Landlord may terminate this Lease by written notice and recapture the Premises, and the Tenant's obligations end on the termination date. (d) Temporary closures of up to 14 days a year for refits or stocktakes, on notice, are not a breach of this clause.

Sample wording, not legal advice.

Variants

What to negotiate

• Hours and what open means

  A covenant to trade should define core hours by reference to the centre's hours, and say what counts as open: staffed, stocked and with the usual range. Tenants should exclude closures for refits, stocktakes, casualty and events beyond their control, as the sample's last sub clause does.

• Remedies that actually work

  Because courts are reluctant to order a business to keep trading, landlords rely on damages, a percentage rent formula, or a recapture right that lets them re let the space. Tenants should cap damages and make sure a recapture ends all their obligations, including rent, from the termination date.

• Co tenancy links

  Anchor tenants often agree to a continuous operation covenant only if other anchors keep trading too. If the centre loses its other draws, the tenant wants the right to reduce rent or go dark. Tying the two clauses together avoids a tenant being forced to trade in an emptying centre.

The risk of leaving it out

Without an operating covenant, a tenant can close its store and keep paying rent, leaving a dark unit that drags down the trade of neighbouring shops and the value of the centre. Without a go dark right, a tenant that is losing money in a location can be held to trading at a loss, or face a damages claim if it closes.

How courts enforce keep open covenants

In Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd in 1997, the House of Lords refused to order a supermarket to keep trading under a keep open covenant, holding that specific performance requiring a business to carry on trading was not appropriate, and that damages were the usual remedy. US courts are divided, with many also declining to order a tenant to operate and awarding damages instead, which is why US leases rely on recapture and go dark terms. Law checked on 21 October 2026. This page explains how the law works and is not legal advice.

US and UK treatment compared

In England and Wales, a keep open covenant is valid but generally enforced by damages, following Argyll. In the US, the answer depends on the state: some courts have ordered specific performance of an express operating covenant, many have not, and courts generally will not imply a duty to operate from a percentage rent clause alone. In both places a clear go dark right and a recapture right do more for both sides than a covenant that may not be specifically enforced.

The sample in practice

The pharmacy must trade for the first five years, when its presence matters most to the centre's leasing. After that it may go dark on 90 days' notice while paying rent, and if it stays dark for 120 days the landlord may take the space back and re let it. That gives the pharmacy an exit from a failing store and gives the landlord a way to fill the gap, the trade both sides usually want.

Where the clause sits in a generated document

Commercial and retail leases carry this clause beside the permitted use clause. When asking the AI document generator for a lease, state the trading period, the core hours, permitted closures, any go dark right and notice, and the recapture right and timing.

Documents that carry this clause

Commercial lease agreement template with outgoings and fit out termsA retail lease is decided by three numbers and two clauses: the rent, the review, the outgoings, the fit out contribution and the make good. This 12 page Victorian lease sets all five out in the open, including the outgoings the landlord is not allowed to recover at all.

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