Question

What are the key factors the court uses in evaluating each of the stall stores?

 

 

Answer 1

Case summary:

JP owns and manages JP Plaza Shopping Center and owing to the departure of major tenant from the shopping plaza, there was a huge space vacant at this place. When Mr. BM who owns AMR Market showed his interest in this place, JP came into a 10 year lease with AMR Market. AMR Market is a wholesaler of different farm produce and operates a flea market. This lease gave a tough competition to RD Brand that operates around 40 grocery stores including the one at JP Plaza. With the lease agreement between JP and AMR Market, the restrictive covenant clause in the agreement between JP and other small grocery stores at the plaza was violated. Over this, RD alongwith other grocery store owners filed a case against JP Plaza for the violation of restrictive covenant. But the court favored RD stating that there are certain stalls of AMR Market that violates restrictive covenant. And, thereby the court denied JP’s motion to dismiss this case.

 

Restrictive covenant or covenant not to compete stands for the clause in a contract between parties in which the parties are prohibited from competing with each other for a particular period of time and in geographic location or territory.

 

Conclusion:

The key factors that the court used in evaluating each of the stall stores are as follows-

• AMR Market is a wholesaler that carries and operates its business using eight different stalls which are separately owned and operated.

• The trade name and signage in each store is different that separates every stall from each other when it comes to products and services that it offers to the customers.

• Each stall is separately operated and managed by different proprietors making AMR Market not a legal entity for owning these stalls.

• There are separate cash registers and credit card readers for each of the stalls.

 • Though restrictive covenant gets applied to a single retailer, AMR market could not be held as a single retailer and liable for the violation of restrictive covenant because of the wholesale nature of the business providing separate ownership to each eight stalls.

JP owns and manages JP Plaza Shopping Center and owing to the departure of major tenant from the shopping plaza, there was a huge space vacant at this place.