The right to goodwill

The right to goodwill

It is an amount that the landlord (whether the owner is the same or the benefit) takes from the tenant at the beginning of the lease and separately from the leased property to lease and transfer the premises to him.

The right to do business and trade

It is a right that gradually and over time arises for the tenant of the place of business and trade. As a result, after the tenant has worked and gained a client and credit, he has a right called the right to do business.

In general, the right to do business and trade and goodwill arises after the conclusion of a lease agreement. Renovation approved in 1960 and the Law on Renovation and Urban Development approved in 1968 and the bill on the purchase and acquisition of land and real estate for the implementation of public, civil and military programs approved by the government in 1979 provides that if the government wants a place of business for someone for the above to acquire, he must pay goodwill and the right to do business, so there is no need for a rental relationship.

The right business today

In 1997, a law on landlord-tenant relations was passed and it was decided that it is permissible to obtain goodwill in the cases mentioned in the law, but claiming anything other than goodwill is prohibited. In the case of concluded commercial premises, it is permissible to take goodwill in them, but the right of business and trade is not granted to the tenant.

The right to goodwill in the law of 1997

According to Article 6 of the Law on Landlord-Tenant Relations, whenever the landlord leases his commercial property, he can receive a sum of goodwill from the tenant, and the tenant can lease an amount from the landlord during the lease term or receive another tenant as goodwill unless the right to transfer has been revoked in addition to the rent. If the landlord has not received goodwill and the tenant transfers the property to another upon receipt of goodwill, the tenant has the right to claim goodwill at a fair daily price when vacating.

If it is stipulated in the lease contract that the same tenant is in possession of the tenant, the landlord does not have the right to increase the rent and vacate the same tenant and undertakes to transfer the same tenant to him every year for the same amount. In this case, the tenant can receive money from the landlord or other tenant as goodwill for his rights. Also, if it is stipulated in the lease contract that the landlord does not rent the same tenant to a non-tenant and leases it to the occupying tenant every year, the tenant can claim a sum of goodwill to receive his salary or vacate the premises.

Comparing the right of business and trade with the right of goodwill

• Goodwill right according to Article 6 of the Law on Landlord-Tenant Relations approved in 1997 and valid jurisprudential sources is the property or amount that the tenant rents to the landlord at the beginning of the contract and by paying this amount is entitled to receive a fair equivalent at the time of eviction but the right to do business and trade is in fact the acquisition of fame and prosperity that has been created in the property by the action of the tenant, whether the tenant has given property or money to the landlord or not.
• The right to do business and trade is acquired gradually and over time, and such a right may not exist at all. In other words, such a right is likely to be obtained and depends on the tenant’s action. However, goodwill is definite and arises as soon as the tenant pays the amount or property to the landlord.
• The amount of goodwill is known; however, the amount of the right to business, profession and trade can’t be calculated and predicted, and the landlord may be revoked in the correct way at the end of the lease due to a violation by the tenant, or such a right may not be obtained at all.

• Goodwill can be revoked; because it is achieved by paying an amount from the tenant; however, some people believe that it is caused by concluding a contract and the condition of entitlement is good reputation.
• Goodwill can be seized; but the right to do business cannot be confiscated.
• The right to goodwill is guaranteed; but the right to do business is not guaranteed.
• Goodwill can be transferred and transferred to others; however, the right of business and profession cannot be transferred to another, except by requesting the transfer of benefits and issuing a ruling in this regard or delegating the transfer to another.
• The right to goodwill is not revoked by violation; but the right to do business is revoked just because of the violation.
• Goodwill is paid to the landlord, not to the first tenant, and business reputation, business prosperity, and corporate credit have no effect on the goodwill, and the landlord can’t take the goodwill and rent the property; but he can’t later claim goodwill from the tenant, which is not the case with business rights.

Abolition of the right to do business in the contract

If the subject of the question is about the place of business that is subject to the law of 1977, the answer is no, because the right of business or trade is a right that is given to the tenant by evacuating the place of business and this right cannot be revoked before it is created. Contrary to the right to goodwill, its realization does not require payment to the landlord, so if the place is rented for business and the tenant has not paid money to the landlord when preparing the contract or undertakes in the lease that he has no right to receive business right at the time of eviction such a condition is not effective and if the landlord has gone to court to evict the tenant, the court will issue an eviction order and pay the business fee.

If you have any questions regarding the right to goodwill and the right to profession and skills and related legal provisions, or you need guidance in preparing and implementing the provisions of the petition and the bill for the right to goodwill and the right to profession and skills, our experienced consultants and lawyers in The Asia Lawyers Group will answer your questions.