Whether a non-compete clause in a business rental agreement is enforceable?

UPDATED: Sep 30, 2022

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Whether a non-compete clause in a business rental agreement is enforceable?

A friend has a cigar store in Virginia. He is considering expanding his offering in the current location to include a limited number of alcoholic beverages and light foods. He can meet local regulatory requirements, but has been told by the landlord that a restaurant in the same shopping strip has a clause in their lease to say they have exclusive rights to sell food and beverages. My friends lease makes no mention of any limitations on his business that would complement this assertion. Is such a clause enforceable against him if he never signed anything agreeing to the limitation?
Thank you very much

Asked on May 4, 2016 under Real Estate Law, Virginia


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

No, a clause in A's lease or contract is not enforceable against B if B is not a party to (i.e. did not sign) that agreement: agreements, such as leases or contracts, are only enforcable against those who are part of (i.e. parties to) them. It's possible that the landlord could be liable to the restaurant, if the landlord failed to put a limitation into your friend's lease stating the he/she could not offer drinks and food (of course, your friend could, if such a clause or provision were in the lease he/she was offered, have refused to sign the lease and rent here; but if he/she did sign, then he/she would be limited by what's in his/her lease); if the landord did not put the appropriate restrictions into other leases when he/she could have, then he/she may have violated his/her obligations under the "no other food or drink" provision of the restaurant's lease by allowing competition in. But that's the landord's problem, not your friend's; your friend is only responsible for what he/she signed.

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