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11. december 2020

Lease Agreement Exclusivity

An exclusive use agreement is a contractual clause generally used in commercial leases. It says that the tenant can only use the rented space for specific purposes. These agreements are often used in shopping malls to allow a tenant to use only space for an activity, such as a restaurant. B, an electronics store or clothing store, while preventing other tenants from using their premises for the same purpose. The supermarket opened in June 1998 and housed both a full-service pharmacy and a Dropbox for photo processing. Its signs and advertisements proclaimed it the “drug and food market.” The opening of the store had a direct and negative impact on Rite Aid`s business. Hannaford averages about $30,000 a month in prescription drug sales, which is the kind of contest Rite Aid has tried to avoid by the exclusivity of his lease. In protest, Rite Aid ended the payment of its rent. An exclusive use clause is defined as a provision within a commercial tenancy agreement that prohibits a landlord from renting to another tenant for the same commercial purpose as the existing tenant. Exclusive use clauses are the most common in shopping malls, but can be included in any commercial lease. These clauses are important to the success of many small businesses and should be carefully considered and developed in order to be retaliatory. An effective exclusivity clause protects the tenant and future income by limiting or avoiding direct competitors in a given environment, whether it is the same location or adjacent real estate of the same landlord.

In return, the owner benefits from strong sales and a more diverse mix of tenants and services to attract potential customers to the property. The conditions for breaking exclusivity clauses often include remedial measures such as terminating the tenancy agreement or healing the infringement, or if the tenant stays and wishes to remain profitable, this could result in a reduction in rent. Rag Shop asked the court for permission to intervene in the case to protect his position and stated that he had a direct interest in the outcome of the lawsuit. Allowing Michaels to operate a craft store would be contrary to the exclusivity of Rag Shop`s lease, which would prejudice the store. An exclusive use contract naturally benefits the tenant because it eliminates direct competition. However, when negotiating such provisions in the Lase contract, tenants make a fair point when they say that the landlord also benefits, because the exclusive chances increase that this business is going well.