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Radioshack Corporation v. Saker Enterprises

A-4516-06T1 (N.J. Super. App. Div. 2008) (Unpublished)

LEASES; EXCLUSIVE USE — Even though cellular telephone companies can be thought of as selling phone services, because such services are commonly bundled with the sale of wireless telephones, a cellular telephone company’s retail store would violate another tenant’s exclusive use right where the other tenant’s exclusive use right bars businesses whose primary use involves the sale of electronic equipment and components.

A commercial tenant engaged in the retail sale of consumer electronics, cellular phones, accessories, and service at a shopping center. The tenant’s lease barred the landlord from leasing other space to any tenant “whose primary use involve[d] the sale of electronic equipment and components.” One month after entering into a lease extension, the commercial landlord entered into an agreement with an authorized agent for a wireless company to lease retail space at the center. The tenant filed suit, claiming under its lease it could lower its rental payment because the landlord leased space to another tenant whose primary enterprise was the sale of electronic equipment and components. The lower court granted summary judgment in favor of the landlord, concluding that the lease of space to the other tenant did not trigger a product exclusivity clause in the lease because the tenant primarily sold wireless services rather than electronic equipment and components. The tenant appealed.

The Appellate Division reversed, finding that the lower court erred in concluding that the primary business of the cellular company was the sale of phone service. It gave judicial notice to other state cases which found that service plans were sold in bundle with wireless telephones. As such, the Court concluded that the primary use of the wireless company’s store was to sell telephones and wireless service, which fell within the ambit of sale of electronic equipment and components for purposes of the product exclusivity clause at issue. The matter was remanded for further proceedings to determine the amount of rent due under the lease.


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