Legal Case Summary
Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386
Landlord and tenant; whether land held on yearly tenancy; whether agreement terminable by successor
Facts
A strip of land adjacent to a highway was sold to the council. The council leased the land back to the seller and the agreement stated the grant was to last until the council required the land for road widening purposes. The land was not so required. A notice to quit was served to recover possession of the land, and Prudential argued the notice was void because the land was not being recovered for road widening purposes.
Issues
The landlords argued the original agreement was void because it created a term which was of uncertain duration and such tenancies are invalid under the rule in Lace v Chantler [1944] KB 368. Since the tenants had gone into possession and were paying rent, a legal periodic tenancy had been created, and the landlords could terminate the tenancy after having given the tenants appropriate notice. The tenants argued the parties should be bound by contractual agreements they had freely entered. The original land owner was only willing to allow the council to take the freehold on the basis that he could continue to remain in occupation until it was required for road widening.
Decision/Outcome
The original agreement was void because it purported to grant the land for an indeterminate term. The tenants had gone into possession and paid rent and this had created a legal periodic tenancy. Periodic tenancies are saved from being of indeterminate duration because both parties can terminate the agreement on notice expiring at the end of each period. The landlord could, therefore, terminate the lease by giving notice.
Updated 21 March 2026
This case summary accurately reflects the decision in Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386 and the legal principles it established. The rule that a lease must be of certain duration (as confirmed in Lace v Chantler [1944] KB 368) and the treatment of uncertain-term agreements giving rise to periodic tenancies remains good law.
However, readers should be aware that the certainty of term requirement has been subject to academic criticism and some judicial qualification. Most significantly, in Mexfield Housing Co-operative Ltd v Berrisford [2011] UKSC 52, the Supreme Court revisited related principles in the context of a monthly tenancy purportedly terminable only on specified events. The Supreme Court held that where such an agreement is made with an individual (as opposed to a company), the arrangement could be saved by treating it as a term of 90 years determinable under the Law of Property Act 1925, s 149(6). This does not overrule Prudential directly, but it does limit its practical effect in certain circumstances involving individual tenants. The Prudential principles continue to apply, particularly where the tenant is a company or other body that cannot benefit from s 149(6). Students should read Prudential alongside Mexfield for a complete picture of the current law.
