Exclusive Use Agreement: Everything You Need to Know

An exclusive use agreement is a contract clause typically used in commercial leases in which the tenant can only use the leased space for a specific purpose.3 min read

An exclusive use agreement is a contract clause typically used in commercial leases. It states that the tenant can only use the leased space for a specific purpose. These agreements are commonly used in shopping malls to only allow a tenant to use a space for one activity, such as a restaurant, an electronics store, or a clothing store, while also restricting other tenants to use their spaces with the same purpose.

Effects and Proper Implementation

The first effect of an exclusive use agreement is that it obviously affects the number of other potential tenants in the shopping mall. If such an agreement is signed, the landlord must be very careful not to break the agreement by allowing a similar business to lease a space. It's crucial that landlords managing large shopping malls have a list of all signed exclusive use agreements in order to avoid any potential conflict of interest in the future.

165px;" class="adsbygoogle">Not only must landlords be careful not to lease a space to anyone violating a previous exclusive use agreement, but they must also make sure they can properly deal with such a situation. All leases should clearly specify the penalties for engaging in any commercial activity that violates a previous exclusivity deal, and the landlord must stop the violation and apply necessary penalties. For that to work, the exclusivity clause must be very clearly written in the lease contract so there will be no room for ambiguity when dealing with certain situations.

Tennant's Perspective

From the point of view of a tenant requesting an exclusivity agreement, the first step is to make sure that the provision in the contract properly does what it's intended to do. A vaguely written clause has the potential to make problems for everyone, leading to conflicts between landlord and tenants. The tenant and landlord must work together to properly define exclusivity in such a way that the business owner is protected against direct competition within the shopping mall and that the landlord is not severely restricted in the new tenants he or she is allowed to accept.

The way the exclusive use agreement can be enforced by the tenant is another vital point. The tenant must make sure that, in the eventuality of a competing business leasing a space in the same shopping center and violating the terms of the exclusivity deal, it has the legal means to enforce exclusivity. This sometimes proves to be a problem because the competing business is not a part of the agreement between the first business and the landlord, leading to technical legal issues.

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