Enforcing Lease Addendum

[BobGG]

What is the name of your state? South Carolina

We have rented a commercial space in a small shopping center and opened an ice cream shop selling homemade ice cream and associated items. When we exercised our lease we added an addendum as follows : Section 5 ; Exclusive Use . Landlord hereby grants to tenant an exclusive for the operation of any frozen type confection , including but not limited to ; frozen yogurt , Italian ice , snow cones , etc .. ( i ) on the property and (ii) on any other property which landlord owns which is on the same block as the building . Recently , an adjacent tenant selling take -out food began selling ice cream . Our intent for the addendum was to limit the landlord to leasing to a competitor in our field of sale. My question is can we force the landlord to enforce this addendum to an existing tenant ? We have been in this lease for over a year now and the existing tenant just recently started to sell ice cream ( they have been there for over three years ). Thanks in advance .

 

[Zigner]

How much money are you willing to spend on this? It's a business decision that must be made.

 

[BobGG]

Money for what ? I'm asking the question to find out if my situation is enforceable .

 

[Zigner]

Money for what ? I'm asking the question to find out if my situation is enforceable .

It may be enforceable. You would need a complete review of your contract by a local attorney to know for sure.
Have you talked to the landlord about the matter? If he's aware of it, but does nothing, then you would need to enforce it through legal means.

You will need to spend money on the attorney.

 

[BobGG]

Thank you for your reply. I will meet with the landlord and proceed after we meet.

 

[adjusterjack]

Our intent for the addendum was to limit the landlord to leasing to a competitor in our field of sale.

I hardly think that the take out shop is a competitor in your "field of sale."

If the LL doesn't want to cooperate you will have a tough, and expensive, road ahead trying to enforce that addendum. You would need to prove (not just say) that you are being caused monetary damages.

In my neighborhood there is a Cold Stone Creamery and a Burger King on the same corner. Burger King sells ice cream based products. They don't seem to be hurting each other's businesses.

Do talk the landlord. But if he won't step up, you'll have to litigate if you want to stop the other business from selling ice cream.

 

[pac72]

I couldn't see the lease addendum being enforceable to a 3rd party , who I doubt has any restriction in his lease prohibiting sales of certain products.

 

[adjusterjack]

I meant litigation against the landlord for any loss of profits..

There's no way to compel the landlord to act against the other tenant because then the landlord could be in breach of that tenant's lease if it has no restriction on products.

And the more I think about it I don't see where the landlord has any liability since the other tenant was there for 3 years before selling ice cream. Might be completely beyond the landlord's control.

OP's addendum might just fall under the impossibility doctrine of contract law.

 

[justalayman]

The problem is the landlord, most likely, cannot prevent the other store from selling ice cream. The landlord also, most likely, cannot evict them if they do sell ice cream.

In other words the landldord can’t do anything about the other store selling ice cream.

Your aren’t going to get any compensation for the landlord either as he cannot enforce a rule against the other tenant that isn’t in their lease.

In other words: there is, most likely, nothing you can do about this situation

 

[FlyingRon]

I disagree wtih Justa on this. If the landlord issued a lease to another business that didn't protect the exclusivity in the poster's lease, they are indeed liable. The landlord can not retroactively apply changes to the other party's lease but they certainly are responsible for not providing the exclusivity.

 

[Zigner]

I disagree wtih Justa on this. If the landlord issued a lease to another business that didn't protect the exclusivity in the poster's lease, they are indeed liable. The landlord can not retroactively apply changes to the other party's lease but they certainly are responsible for not providing the exclusivity.

I agree with you, however, what is the measure of damages and how can it really be proven?

 

[BobGG]

I appreciate the feedback / views on this topic. Proof positive that not every document and / or legal directive is foolproof.

 

[adjusterjack]

If the landlord issued a lease to another business that didn't protect the exclusivity in the poster's lease, they are indeed liable.

Good point, except for one thing.

The other shop has been there for 3 years and Bob's shop only 1 year.

We have been in this lease for over a year now and the existing tenant just recently started to sell ice cream ( they have been there for over three years

Three years ago it would not have been possible for the landlord to anticipate that the existing tenant would someday compete with a future tenant. And when leasing to Bob, could not have anticipated that the existing tenant would one day start selling ice cream in competition with Bob.

Restatement (Second) of Contracts - Damages
351. UNFORESEEABILITY AND RELATED LIMITATIONS ON DAMAGES
(1) Damages are not recoverable for loss that the party in breach did not have reason to foresee as a probable result of the breach when the contract was made.

There is an exception so here's a link to the section though I don't think the exception applies to Bob's situation.

http://www.lexinter.net/LOTWVers4/unforeseeability_and_related_limitations_on_damages.htm

 

[Zigner]

Three years ago it would not have been possible for the landlord to anticipate that the existing tenant would someday compete with a future tenant. And when leasing to Bob, could not have anticipated that the existing tenant would one day start selling ice cream in competition with Bob.

I disagree as to foreseeability. In fact, the possibility that a take-out food tenant might someday sell ice cream is pretty foreseeable, if you ask me. The landlord should have been proactive with the new tenant by making sure their lease included a clause prohibiting them from selling ice cream, etc.

 

[FlyingRon]

It matters not how many years each has been there. If they gave him an exclusivity clause and can't deliver because of their failure to have already (or in the future) provide that restriction on other lessees, they have breached the contract.